Court Opinion

ID: 818303
Source: CourtListenerOpinion
Date Created: 2013-02-02 23:35:00.705985+00
Date Added: 2024-06-11T09:02:42.439440
License: Public Domain

Slip Op. 07-4

           UNITED STATES COURT OF INTERNATIONAL TRADE

                                   :
SHANDONG HUARONG GENERAL           :
GROUP CORPORATION and              :
LIAONING MACHINERY IMPORT          :
& EXPORT CORPORATION,              :
                                   : Before: Richard K. Eaton, Judge
                 Plaintiffs,       :
                                   : Court No. 01-00858
          v.                       :
                                   :
UNITED STATES,                     :
                                   :
                 Defendant.        :
                                   :

                         MEMORANDUM OPINION

[United States Department of Commerce’s Final Results of
Redetermination Pursuant to Court Remand sustained.]

                                               Dated: January 9, 2007

Hume & Associates, PC (Robert T. Hume), for plaintiffs.

Peter D. Keisler, Assistant Attorney General, Civil Division,
United States Department of Justice; David M. Cohen, Director,
Commercial Litigation Branch, Civil Division, United States
Department of Justice; Jeanne E. Davidson, Deputy Director,
Commercial Litigation Branch, Civil Division, United States
Department of Justice (Stephen C. Tosini); Ada E. Bosque, United
States Department of Commerce Office of Chief Counsel for Import
Administration, of counsel, for defendant.

     Eaton, Judge: This matter is before the court following a

third remand to the United States Department of Commerce
Court No. 01-00858                                      Page 2

(“Commerce” or the “Department”).1   In Shandong Huarong General

Group Corporation v. United States, 29 CIT    , Slip Op. 05-129

(Sept. 27, 2005) (not published in the Federal Supplement)

(“Huarong III”), the court remanded the Department’s second

remand determination in the ninth administrative review of the

antidumping duty order covering the importation of heavy forged

hand tools (“HFHTs”) from the People’s Republic of China (“PRC”).

See HFHTs From the PRC, 66 Fed. Reg. 48,026 (ITA Sept. 17, 2001)

(final determination) (“Final Results”).   Plaintiffs Shandong

Huarong General Group Corporation (“Huarong”) and Liaoning

Machinery Import & Export Corporation (“LMC”) (collectively

“plaintiffs” or the “Companies”) challenged that determination

with respect to the Department’s decision to apply adverse facts

available (“AFA”) and to assign the Companies a 139.31 percent2

dumping rate to their sales of bars and wedges.3   The court found

     1
          Ames True Temper, as amicus curiae, has filed comments
to Commerce’s remand results.
     2
          In the Final Results, both companies received the PRC-
wide rate for this review of 47.88 percent. See Final Results,
66 Fed. Reg. at 48,028, 48,030.
     3
          In cases where a respondent:

          (A) withholds information that has been
          requested by the administering authority or
          the Commission under [19 U.S.C. § 1677],

          (B) fails to provide such information by the
          deadlines for submission of the information
          or in the form and manner requested, subject
                                                   (continued...)
Court No. 01-00858                                            Page 3

that Commerce failed to support its selection of the 139.31

percent rate with substantial evidence, that the rate was

aberrational and punitive, and remanded the determination with

instructions for Commerce to select another justifiable rate.          On

the third remand, Commerce selected a rate of 47.88 percent to

apply as AFA.      See Final Results of Redetermination Pursuant to

Court Remand (ITA Mar. 3, 2006) (“Third Remand Determination”) at

1.   The Companies now challenge the Department’s selection on

remand of the 47.88 percent rate applicable to their sales of

bars and wedges.      Jurisdiction lies with 28 U.S.C. § 1581(c)

(2000) and 19 U.S.C. § 1516a(a)(2)(B)(iii) (2000).       For the

      3
          (...continued)
              to subsections (c)(1) and (e) of section
              1677m of this title,

              (C) significantly impedes a proceeding under
              this subtitle, or

              (D) provides such information but the
              information cannot be verified as provided in
              section 1677m(i) of this title,

              the administering authority and the
              Commission shall, subject to section 1677m(d)
              of this title, use the facts otherwise
              available in reaching the applicable
              determination under this subtitle.

19 U.S.C. § 1677e(a) (2000).

     If Commerce determines that a respondent has “failed to
cooperate by not acting to the best of its ability to comply with
a request for information,” the Department may then “use an
inference that is adverse to the interests of that party in
selecting from among the facts otherwise available.”
19 U.S.C. § 1677e(b).
Court No. 01-00858                                        Page 4

following reasons, the court sustains Commerce’s Third Remand

Determination.

                              BACKGROUND

     The facts of this case have been set forth adequately in the

court’s prior opinions.    A brief discussion of the facts relevant

to the instant action follows.    In the Final Results, Commerce

used AFA to set the Companies’ dumping margins and assigned the

Companies the PRC-wide rate of 47.88 percent for their sales of

bars and wedges.     See Final Results, 66 Fed. Reg. at 48,028.    The

court agreed that Commerce supported with substantial evidence

its application of AFA to the Companies, but because it found

that the Companies had demonstrated their independence from the

PRC-wide entity, it remanded the Final Results and instructed

Commerce to assign the Companies separate rates.     See Shandong

Huarong Gen. Group Corp. v. United States, 27 CIT 1568, 1596

(2003) (not published in the Federal Supplement) (“Huarong I”);

see also Third Remand Determination at 5 (“Huarong received AFA,

in part, because it failed to report certain transactions as

being its own sales, rather than another company’s sales, while

LMC received AFA because certain transactions it reported as its

own sales were, in fact, made by another company.”).    On remand,

Commerce found that the Companies were entitled to separate rates

and assigned each of them an individual rate of 139.31 percent.
Court No. 01-00858                                        Page 5

That rate was the highest antidumping duty rate from any prior

segment of the proceeding.   Because it found that the Department

failed to justify its selection of the 139.31 percent rate, the

court again remanded the matter.     See Shandong Huarong Gen. Group

Corp. v. United States, 28 CIT      ,   , Slip Op. 04-117 at 17–18

(Sept. 13, 2004) (not published in the Federal Supplement)

(“Huarong II”).

     In accordance with the court’s remand, the Department

attempted to explain its decision to apply the 139.31 percent

rate to the Companies’ sales of bars and wedges, but the court

found the effort insufficient.     See Huarong III, 29 CIT at

  , Slip Op. 05-129 at 21–22.    Specifically, the court found the

rate both aberrational and punitive, and further concluded that

Commerce failed to support adequately the reasonableness and the

relevance of that rate to the Companies’ sales.    The court

remanded the matter for a third time with instructions for the

Department to choose from the following two rates: “(1) the

Companies’ rates from a previous review, with a built-in increase

as a deterrent to non-compliance; or (2) a calculated rate that

accurately reflects what the Companies’ rates would have been had

they cooperated, with a built-in increase as a deterrent to non-

compliance.”   Id. at   , Slip Op. 05-129 at 22.

     In the Third Remand Determination, Commerce returned to the

rate of 47.88 percent, which is both the country-wide rate in
Court No. 01-00858                                         Page 6

this administrative review and the rate calculated for another

company in the 1992–1993 administrative review.      See Third Remand

Determination at 1, 4.    For the reasons that follow, the court

sustains the selection of that rate.

                          STANDARD OF REVIEW

     The court “shall hold unlawful any determination, finding,

or conclusion found . . . to be 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 is

‘such relevant evidence as a reasonable mind might accept as

adequate to support a conclusion.’”      Huaiyin Foreign Trade Corp.

(30) v. United States, 322 F.3d 1369, 1374 (Fed. Cir. 2003)

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

The existence of substantial evidence is determined “by

considering the record as a whole, including evidence that

supports as well as evidence that ‘fairly detracts from the

substantiality of the evidence.’”     Id. (quoting Atl. Sugar, Ltd.

v. United States, 744 F.2d 1556, 1562 (Fed. Cir. 1984)).

                              DISCUSSION

     When selecting a rate to apply as AFA, “Commerce must do

more than assume any prior calculated margin for the industry is

reliable and relevant.”    Ferro Union, Inc. v. United States, 23
Court No. 01-00858                                           Page 7

CIT 178, 204, 44 F. Supp. 2d 1310, 1334 (1999).   Indeed, “[i]n

order to comply with the statute and the [Statement of

Administrative Action]’s statement that corroborated information

is probative information, Commerce must assure itself that the

margin it applies is relevant, and not outdated, or lacking a

rational relationship to [the respondent].”    Id. at 205, 44 F.

Supp. 2d at 1335.    In its previous remand determination, Commerce

did not meet the standard set forth in Ferro Union.     In

particular, Commerce failed to demonstrate either the

reasonableness or the relevance of the 139.31 percent rate to the

Companies.   See Huarong III, 29 CIT at    , Slip Op. 05-129 at 21;

see also 19 U.S.C. § 1677e(c).4   The court stated that the law

“requires that an assigned rate relate to the company to which it

is assigned.”   Huarong III, 29 CIT at    , Slip Op. 05-129 at 11.

In addition, the court stated that where a rate from a previous

review is selected as AFA, if that prior rate was a weighted-

average margin, “then the preferred method would be to use the

     4
          Pursuant to that provision:

          When the administering authority or the
          Commission relies on secondary information
          rather than on information obtained in the
          course of an investigation or review, the
          administering authority or the Commission, as
          the case may be, shall, to the extent
          practicable, corroborate that information
          from independent sources that are reasonably
          at their disposal.

19 U.S.C. § 1677e(c).
Court No. 01-00858                                         Page 8

Companies’ own weighted-average margins for the same review.”

Id. at   , Slip Op. 05-129 at 17.   Moreover, the court found that

the 139.31 percent rate selected was aberrational and punitive.

Id. at   , Slip Op. 05-129 at 21.   Thus, in order to be

sustained, Commerce’s current selection of the 47.88 percent AFA

rate must be both reliable and relevant to the Companies.

     In plaintiffs’ view, Commerce failed to corroborate its

selection of the 47.88 percent rate in accordance with 19 U.S.C.

§ 1677e(c).    See Pls.’ Comments on Dep’t of Commerce’s Final

Results of Redetermination Pursuant to Court Remand at 7.

Specifically, plaintiffs claim that: (1) Commerce did not

establish the reliability of the 47.88 percent rate because it

failed to support the rate with an independent source; (2)

Commerce failed to explain how a 47.88 percent rate that was

applied to an unrelated company in a prior review was relevant to

the Companies here; and (3) Commerce incorrectly employed a

transaction-specific comparison method to determine the deterrent

amount in contravention of the court’s instructions.    See id. at

7, 9, 11–15.

     Despite plaintiffs’ contentions, the court finds that

Commerce has explained adequately the reliability and relevance

of the 47.88 percent AFA rate with respect to the Companies’

sales of bars and wedges, and finds the method employed by

Commerce in reaching its conclusion reasonable.   Here, Commerce
Court No. 01-00858                                         Page 9

selected 47.88 percent, the PRC-wide rate for the underlying

review and the rate that was applied to Fujian Machinery &

Equipment Import & Export Corporation (“FMEC”) during the

1992–1993 administrative review of the bars/wedges order, as AFA.

See Third Remand Determination at 4.   It selected this rate only

after first finding that, had it cooperated, LMC would have

received a rate of 27.18 percent and, likewise, Huarong would

have been subject to a rate of 34.00 percent.    See id.    Commerce

based this finding on the highest previously calculated rates for

each company.   See id.   Commerce then chose to apply the 47.88

percent rate, in part, because that rate, having been previously

verified, was reliable and because the resulting 13.88 percent

increase in Huarong’s rate and the 20.70 percent increase in

LMC’s rate was sufficient to deter any future non-compliance.

See id. at 9.

     An AFA rate must be both reliable and bear a rational

relationship to the respondent.    See Huarong III, 30 CIT at       ,

Slip Op. 05-129 at 11–12; see also F. LLI De Cecco Di Fillippo

Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032

(Fed. Cir. 2000) (“It is clear from Congress’s imposition of the

corroboration requirement in 19 U.S.C. § 1677e(c) that it

intended for an adverse facts available rate to be a reasonably

accurate estimate of the respondent’s actual rate, albeit with

some built-in increase intended as a deterrent to non-
Court No. 01-00858                                        Page 10

compliance.”).    The court finds that Commerce has sufficiently

demonstrated the reliability of the 47.88 percent rate.

According to Commerce:

          In accordance with our normal practice, the
          Department reviewed all potential rates in
          the history of the proceeding which could be
          applied as an AFA rate in the underlying
          segment. For this remand determination, the
          Department has selected as AFA the 47.88
          percent calculated for [FMEC], during the
          1992–1993 administrative review of the
          bars/wedges order. This rate was based upon
          verified data and has not been judicially
          invalidated.

Third Remand Determination at 4 (citations omitted).     Commerce

further stated:

          [U]nlike other types of information, such as
          input costs or selling expenses, there are no
          independent sources for calculated dumping
          margins. Thus, in an administrative review,
          if the Department chooses as total AFA a
          dumping margin from a prior segment of the
          proceeding, it is not necessary to question
          the reliability of the margin. In the
          instant case, the rate selected as AFA, 47.88
          percent, was calculated using verified
          information provided by FMEC during the
          1992–1993 administrative review of the
          bars/wedges order. Furthermore, this rate
          was not judicially invalidated, and we have
          no new information that would lead us to
          reconsider the reliability of the rate being
          used in this case.

Id. at 5–6 (citations omitted).

     In other words, by using a rate from a previous

investigation, Commerce sought to satisfy the reliability

standard found in 19 U.S.C. § 1677e(c).    Thus, the court
Court No. 01-00858                                        Page 11

concludes that Commerce established the rate’s reliability as

required by statute, in part, because the Department selected a

rate that was based on verified information provided by FMEC in

the 1992–1993 review.

     In addition, the court finds that Commerce demonstrated the

relevance of the 47.88 percent rate to both Huarong and LMC.    In

this case, to satisfy the court’s concerns with respect to the

relevance of the rate to the Companies, Commerce first estimated

what the Companies’ rates would have been had they cooperated.

          [F]or non-cooperative respondents, a
          conservative estimate of the lower bound
          [sic] of what the respondent’s margin would
          be had it cooperated is the highest-weighted
          average margin calculated for that respondent
          in a prior review. In this case, using the
          conservative assumption, the Department
          expects that, at a minimum, Huarong and LMC
          would have received dumping margins of 34.00
          and 27.18 percent, respectively, had they
          cooperated.

Third Remand Determination at 9.   The Department then considered

an amount to be added to those rates to deter future non-

compliance.   To test the relevance of that additional amount to

the Companies, Commerce examined the Companies’ transaction-

specific margins.    See id. (“These transaction-specific margins

are actual margins calculated for the respondent in question and

demonstrate the highest margins of dumping made by the respondent

when selling subject merchandise in the U.S. market.”).    That is,

to determine an appropriate amount to add to the Companies’
Court No. 01-00858                                           Page 12

previously calculated rates, Commerce compared the Companies’

highest transaction-specific margins to the 47.88 percent rate.

     Commerce made the comparison for each company.     After

comparing Huarong’s highest transaction-specific margins to

available verified rates, Commerce found that the 47.88 percent

rate was relevant.     Specifically, Commerce found:

             (1) all of Huarong’s positive transaction-
             specific margins are above 47.88 percent, the
             quantity of these transactions is not
             insignificant, and these sales are not
             aberrational; (2) there are no other
             previously calculated, weighted-average rates
             from which to select as AFA that are greater
             than 47.88 percent but less than the range of
             transaction-specific margins; and (3)
             selecting a rate lower than 47.88 percent
             would not act as an effective deterrent in
             light of the high transaction-specific
             margins. For these reasons, the transaction-
             specific margins are evidence that the 47.88
             percent rate is relevant to Huarong and
             provides the appropriate deterrent to future
             non-compliance.

Id. at 10.    Similarly, with respect to LMC, Commerce concluded:

             21 percent of LMC’s transaction-specific
             margins were positive (i.e., greater than
             zero) and that all of these positive
             transaction-specific margins were high,
             although not quite as high as Huarong’s
             positive transaction-specific margins. . . .
             [T]he Department is applying the same AFA
             rate to LMC as it is to Huarong because LMC
             identified certain transactions in the
             underlying review as its own sales, when, in
             fact, they were not. . . . For this
             redetermination, we find that selecting 47.88
             as the AFA rate is also relevant for the
             following reasons relating to transaction-
             specific margins: (1) all of LMC’s positive
             transaction-specific margins are above 47.88
Court No. 01-00858                                          Page 13

            percent, the quantity of these transactions
            is not insignificant, and these sales are not
            aberrational; (2) there are no other
            previously calculated, weighted average rates
            from which to select as AFA that are greater
            than 47.88 percent but less than the range of
            transaction-specific margins; and (3)
            selecting a rate lower than 47.88 percent
            would not act as an effective deterrent in
            light of the high transaction-specific
            margins.5

Id. at 10–11 (citations omitted).    Therefore, Commerce determined

that based on a comparison of the 47.88 percent rate to the

Companies’ transaction-specific margins, the 13.88 percent

increase for Huarong and the 20.70 percent increase for LMC would

serve as an appropriate deterrent to future non-compliance.

      To further justify the relevance of these rates, the

Department examined the variation in the Companies’ margins over

prior reviews.    With respect to Huarong, Commerce observed that

the dumping margin assigned to that company for its sales of bars

and wedges in the 1996–1997 review was a calculated 34.00

percent.    See Third Remand Determination at 12.   In the 1997–1998

review, Huarong received a calculated rate of 1.27 percent.       See

id.   Huarong then received a calculated 27.28 percent rate in the

1998–1999 review, the review immediately preceding the underlying

review.    See id.   Likewise, Commerce found that LMC has also

      5
          While what Commerce   says is true, it is worth noting
that the vast majority of the   Companies’ transaction-specific
margins were calculated to be   0.0 percent. See Huraong III, 29
CIT at   , Slip Op. 05-129 at   17 (finding that over 83 percent of
the transactions were at zero   margins).
Court No. 01-00858                                            Page 14

received varying dumping margins from review to review.

Specifically, in the 1996–1997 review, when LMC was first

assigned a calculated rate for its sales of bars and wedges, it

received a 2.94 percent rate.     See id.     In the 1997–1998 review,

LMC was assigned a 0.0 percent rate.        See id.   That changed,

however, in the 1998–1999 review, where LMC was assigned a

calculated rate of 27.18 percent.     See id.

     Thus, Commerce’s chosen rate is not dramatically different

from those fluctuating rates that the Companies previously

received.   That is, it is not unreasonable for Commerce to allot

to Huarong an approximate thirteen-percentage-point increase from

its highest calculated rate of 34.00 percent as a deterrent, and

it is equally permissible for Commerce to add a twenty-

percentage-point increase over LMC’s highest previously

calculated rate as a deterrent.    Thus, unlike in Huarong III,

where the court found a more than 110 percentage point increase

to be aberrational and punitive, the 47.88 percent rate is not so

high as to be aberrational.

     Having considered plaintiffs’ arguments with respect to the

relevance of the chosen rate and Commerce’s explanation of its

decision to apply a rate of 47.88 percent to the Companies’ sales

of bars and wedges, the court finds that: (1) Commerce

established the reliability and relevance of the rate to both

Huarong and LMC; and (2) the method by which Commerce reached its
Court No. 01-00858                                       Page 15

conclusion was reasonable.    Therefore, the court sustains the

Third Remand Determination.

                              CONCLUSION

     Based on the foregoing, the court sustains Commerce’s Third

Remand Determination and its selection of 47.88 percent as the

rate to be applied to Huarong and LMC as AFA for their sales of

bars and wedges.   Judgment shall be entered accordingly.

                                            /s/Richard K. Eaton
                                               Richard K. Eaton

Dated:    January 9, 2007
          New York, New York
                               Slip Op. 07-4

           UNITED STATES COURT OF INTERNATIONAL TRADE

                                   :
SHANDONG HUARONG GENERAL           :
GROUP CORPORATION and              :
LIAONING MACHINERY IMPORT          :
& EXPORT CORPORATION,              :
                                   : Before: Richard K. Eaton, Judge
                 Plaintiffs,       :
                                   : Court No. 01-00858
          v.                       :
                                   :
UNITED STATES,                     :
                                   :
                 Defendant.        :
                                   :

                                 JUDGMENT

     This case having been duly submitted for decision; and the

court, after due deliberation, having rendered a decision herein;

Now therefore, in conformity with said decision, it is hereby

     ORDERED that the United States Department of Commerce’s

Final Results of Redetermination Pursuant to Court Remand

Shandong Huarong General Group Corporation and Liaoning Machinery

Import & Export Corporation v. United States, Court No. 01-00858,

are sustained.

                                               /s/Richard K. Eaton
                                                  Richard K. Eaton

Dated: January 9, 2007
       New York, New York