Court Opinion

ID: 4586680
Source: CourtListenerOpinion
Date Created: 2020-11-16 22:01:12.613349+00
Date Added: 2024-06-11T08:48:28.569834
License: Public Domain

Slip Op. 20-

               UNITED STATES COURT OF INTERNATIONAL TRADE

 PRO-TEAM COIL NAIL ENTERPRISE,
 INC. AND PT ENTERPRISE INC.,

                   Plaintiffs,

 UNICATCH INDUSTRIAL CO., LTD., ET
 AL.,

                   Consolidated Plaintiffs,

            and
                                              Before: Mark A. Barnett, Judge
 S.T.O. INDUSTRIES, INC.,
                                              Consol. Court No. 18-00027
                   Plaintiff-Intervenor,

              v.

 UNITED STATES,

                   Defendant,

             and

 MID CONTINENT STEEL & WIRE, INC.,

                   Defendant-Intervenor.

                                  OPINION AND ORDER

[Remanding the U.S. Department of Commerce’s remand results issued in connection
with the first administrative review of the antidumping duty order on certain steel nails
from Taiwan.]

                                                               Dated: November 16, 2020

Ned H. Marshak, Max F. Shutzman, Andrew T. Schutz, Dharmendra Choudhary, and
Eve Q. Wang, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of New York,
NY, for Plaintiffs Pro-Team Coil Enterprise, Inc. and PT Enterprise Inc.; Consolidated
Consol. Court No. 18-00027                                                            Page 2

Plaintiffs Unicatch Industrial Co., Ltd. and TC International, Inc.; and Consolidated
Plaintiffs Hor Liang Industrial Corp. and Romp Coil Nails Industries Inc.

Ronald M. Wisla, Fox Rothschild LLP, of Washington, DC, for Plaintiff-Intervenor S.T.O.
Industries, Inc.

Sosun Bae, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for Defendant United States. With her on
the brief were Ethan P. Davis, Acting Assistant Attorney General, Jeanne E. Davidson,
Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was
Vania Wang, Attorney, Office of the Chief Counsel for Trade Enforcement &
Compliance, U.S. Department of Commerce, of Washington, DC.

Adam H. Gordon and Ping Gong, The Bristol Group LLC, of Washington, DC, for
Defendant-Intervenor Mid Continent Steel & Wire, Inc.

       Barnett, Judge: In this consolidated action, five sets of plaintiffs 1 each

challenged aspects of the final results of the U.S. Department of Commerce’s

(“Commerce” or “the agency”) first administrative review of the antidumping duty order

on certain steel nails from Taiwan. See Certain Steel Nails From Taiwan, 83 Fed. Reg.

6,163 (Dep’t Commerce Feb. 13, 2018) (final results of antidumping duty admin. review

and partial rescission of admin. review; 2015–2016) (“Final Results”), ECF No. 20-2,

and accompanying Issues and Decision Mem, A-583-854 (Feb. 6, 2018) (“I&D Mem.”),

ECF No. 20-3. The matter is before the court following Commerce’s first

redetermination upon remand, see Final Results of Redetermination Pursuant to Court

1 The five sets of plaintiffs consist of lead Plaintiffs Pro-Team Coil Nail Enterprise, Inc.
and PT Enterprise Inc. (together, “Pro-Team”); Consolidated Plaintiffs Unicatch
Industrial Co., Ltd. and TC International, Inc. (together, “Unicatch”); Consolidated
Plaintiff PrimeSource Building Products, Inc. (“PrimeSource”); Consolidated Plaintiffs
Hor Liang Industrial Corp. and Romp Coil Nails Industries (together, “Hor Liang”); and
Plaintiff-Intervenor S.T.O. Industries, Inc. (“S.T.O. Industries”).
Consol. Court No. 18-00027                                                         Page 3

Remand (“Remand Results”), ECF No. 71-1,2 issued in response to the court’s

resolution of five motions for judgment on the agency record pursuant to U.S. Court of

International Trade (“CIT”) Rule 56.2, see Pro-Team Coil Nail Enter. v. United States,

43 CIT ___, 419 F. Supp. 3d 1319 (2019). The court remanded Commerce’s use of

total facts otherwise available with respect to Pro-Team, id. at 1330–34; sustained

Commerce’s use of total neutral facts otherwise available with respect to Unicatch but

remanded Commerce’s use of an adverse inference when selecting from among the

facts otherwise available (referred to as “adverse facts available” or “AFA”), id. at 1336–

40; declined to reach Hor Liang’s first claim seeking a recalculation of the rate assigned

to non-examined respondents on remand given the absence of a live dispute, id. at

1340; and declined to resolve Hor Liang’s second claim regarding Commerce’s

summary denial of their ministerial error allegation on mootness grounds, id.

       On remand, Commerce reconsidered its use of total facts otherwise available

with respect to Pro-Team and, instead, used Pro-Team’s reported data and calculated a

company-specific dumping margin of zero percent. Remand Results at 6–8, 32. With

respect to Unicatch, Commerce provided additional explanation supporting its use of

total AFA to determine Unicatch’s dumping margin and continued to select the 78.17

percent dumping margin alleged in the petition as the AFA rate. Id. at 8–15, 20–28, 32.

2 The administrative record associated with the Remand Results is divided into a Public
Remand Record (“PRR”), ECF No. 72-2, and a Confidential Remand Record (“CRR”),
ECF No. 72-3. Parties submitted joint appendices containing record documents cited in
their comments on the Remand Results. See Public Remand J.A., ECF No. 94;
Confidential Remand J.A. (“CRJA”), ECF No. 93. The court references the confidential
version of the relevant record documents, unless otherwise specified.
Consol. Court No. 18-00027                                                       Page 4

For the all-others rate applicable to the non-examined respondents, such as Hor Liang,

Commerce calculated the simple average of Pro-Team’s zero percent margin and

Unicatch’s 78.17 percent margin to assign these respondents a rate of 39.09 percent.

Id. at 15–16, 28–32.

       Unicatch submitted comments opposing Commerce’s use of total AFA and its

selection of the petition rate. Confidential Consol. Pls., [Unicatch] Cmts. on

Redetermination (“Unicatch’s Opp’n Cmts”), ECF No. 84. 3 Hor Liang submitted

comments opposing Commerce’s method of calculating the all-others rate. Confidential

Consol. Pls., [Hor Liang] Cmts. on Redetermination (“Hor Liang’s Opp’n Cmts.”), ECF

No. 77.

       Pro-Team submitted comments supporting the Remand Results with respect to

its zero percent rate. [Pro-Team’s] Cmts. Sup[p]orting Remand, ECF No. 86.

Defendant United States (“the Government”) and Defendant-Intervenor Mid Continent

Steel & Wire, Inc. (“Mid Continent”) urge the court to sustain the Remand Results in

their entirety. Def.’s Resp. to the Parties’ Cmts. Upon [Commerce’s] Remand

Redetermination (“Gov’t’s Reply Cmts.”), ECF No. 87; Def.-Int. [Mid Continent’s] Cmts.

in Supp. of Final Remand Results, ECF No. 88.

3S.T.O. Industries filed comments agreeing with and incorporating by reference
Unicatch’s comments. Pl.-Int.’s Cmts. in Opp’n to Remand Results, ECF No. 79.
PrimeSource did not file comments on the Remand Results.
Consol. Court No. 18-00027                                                          Page 5

      For the following reasons, the court sustains Commerce’s redetermination with

respect to Pro-Team 4 and use of AFA with respect to Unicatch. However, the court

remands Commerce’s selection of the petition rate as AFA because Commerce did not

adequately corroborate that rate. Accordingly, the court defers resolution of Hor Liang’s

arguments regarding the all-others rate.

                        JURISDICTION AND STANDARD OF REVIEW

      The court has jurisdiction pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of

1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2018), 5 and 28 U.S.C. § 1581(c).

      The court will uphold an agency determination that is supported by substantial

evidence and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i). “The

results of a redetermination pursuant to court remand are also reviewed for compliance

with the court’s remand order.” SolarWorld Ams., Inc. v. United States, 41 CIT ___,

___, 273 F. Supp. 3d 1314, 1317 (2017) (quoting Xinjiamei Furniture (Zhangzhou) Co.

v. United States, 38 CIT ___, ___, 968 F. Supp. 2d 1255, 1259 (2014)).

4 In the absence of any challenge to Commerce’s redetermination respecting Pro-Team,
the court will not further discuss that aspect of the Remand Results.
5 All citations to the Tariff Act of 1930, as amended, are to Title 19 of the U.S. Code,

and references to the U.S. Code are to the 2018 edition, unless stated otherwise.
Consol. Court No. 18-00027                                                          Page 6

                                        DISCUSSION

  I.   Commerce’s Use of Total AFA for Unicatch and Selection of Unicatch’s
       AFA Rate

          A. Relevant Background

       The court presumes familiarity with the facts and procedural history set forth in

Pro-Team and summarizes below the relevant facts.

       In the underlying administrative review, Commerce selected Unicatch as a

mandatory respondent. Remand Results at 4. Commerce issued Unicatch a section D

questionnaire that contained detailed instructions for preparing a complete cost

reconciliation. Pro-Team, 419 F. Supp. 3d at 1334; see also Remand Results at 4.

Upon examining Unicatch’s section D cost response, Commerce issued a supplemental

questionnaire instructing Unicatch to “revise its cost reconciliation to reconcile the sales

from Unicatch’s audited financial statements to the extended total cost of manufacturing

in Unicatch’s submitted cost database.” Remand Results at 4. In response, Unicatch

explained “that its initial worksheet reconciled the cost of sales to Unicatch’s cost of

production for both subject and non-subject merchandise.” Id. at 4–5 & n.20 (citation

omitted). Commerce issued a second supplemental questionnaire repeating its request

for a revised cost reconciliation and further requesting explanations and documentary

support for each reconciling item. Id. at 5 & n.21 (citation omitted). Unicatch submitted

a revised cost reconciliation “that ended with the cost of production for subject and non-

subject merchandise.” Id. at 5 & n.22 (citation omitted). In its administrative rebuttal
Consol. Court No. 18-00027                                                              Page 7

brief, Unicatch explained how Commerce could use record information to complete the

reconciliation. Pro-Team, 419 F. Supp. 3d at 1335.

       “For the Final Results, Commerce disregarded Unicatch’s submitted data and

determined a dumping margin based on total AFA.” Id. at 1335–36. Pro-Team

remanded that determination. Id. at 1340. The court explained that “Commerce based

its decision to use an adverse inference on Unicatch’s failure to submit a complete cost

reconciliation” but otherwise failed to either address “evidence demonstrating Unicatch’s

attempts to comply with Commerce’s supplemental questionnaire[s] or apprise the court

of its reasons for nevertheless finding less than full cooperation.” Id. at 1339.

       In the redetermination, Commerce continued to find that Unicatch failed to

“cooperate to the best of its ability and that it potentially benefitted from its lack of

cooperation.” Remand Results at 8. Commerce stated that the agency issued “multiple

requests” that “contain[ed] clear instructions on what information was necessary.” Id. at

11; see also id. at 24–25. Commerce explained that it reasonably “expect[ed] more

forthcoming responses” from Unicatch, id. at 11, but Unicatch “simply did not put forth

the effort or cooperation to respond fully to Commerce’s requests for a complete cost

reconciliation,” id. at 12. Further supporting its determination, Commerce explained,

was Unicatch’s provision of instructions for completing the reconciliation, which

demonstrated that Unicatch “understood how to provide the requested information” but

“chose not to do so.” Id. Even then, Commerce found, Unicatch’s instructions “failed to

directly link to the antidumping cost database” and Commerce confronted “significant

discrepancies” when it attempted to complete the reconciliation. Id. Commerce further
Consol. Court No. 18-00027                                                            Page 8

found that Unicatch’s failure to provide a cost reconciliation “would benefit Unicatch”

because it precluded Commerce from conducting a below cost sales analysis or asking

follow-up questions, thus inhibiting the agency’s ability to make a proper determination

whether dumping has occurred. Id. at 14. Commerce also found that Unicatch’s failure

to provide the complete reconciliation allowed Unicatch to “control[] the pace and

schedule for Commerce’s work.” Id. at 22.

       With respect to the AFA rate assigned to Unicatch, Commerce explained that its

“practice is to select, as an AFA rate, the higher of: (1) the highest dumping margin

alleged in the petition, or (2) the highest calculated rate from any previous segment of a

proceeding under an [antidumping] order.” Id. at 15 & n.60 (citations omitted); see also

id. at 27. Commerce further explained that it “select[ed] the highest dumping margin

alleged in the petition, 78.17 percent,” in light of “Unicatch’s multiple failures to supply a

complete reconciliation and to ensure that Unicatch does not obtain a more favorable

result by failing to cooperate than if it had fully cooperated.” Id. at 15. Commerce

rejected the highest calculated rate from the investigation as insufficient to induce

cooperation. 6 Id. Commerce referred to its explanation in the Issues and Decision

6 In the investigation, Commerce calculated rates for the two mandatory respondents in
the amount of zero percent and 2.24 percent, respectively. Certain Steel Nails From
Taiwan, 80 Fed. Reg. 28,959, 28,961 (Dep’t Commerce May 20, 2015) (final
determination of sales at less than fair value). Following litigation before the CIT,
Commerce revised the 2.24 percent rate to 2.16 percent. Certain Steel Nails From
Taiwan, 82 Fed. Reg. 55,090, 55,091 (Dep’t Commerce Nov. 20, 2017) (notice of court
decision not in harmony with final determination in less than fair value investigation and
notice of am. final determination); Mid Continent Steel & Wire, Inc. v. United States, 41
CIT ___, 273 F. Supp. 3d 1161 (2017). That rate is nonfinal because the U.S. Court of
Consol. Court No. 18-00027                                                           Page 9

Memorandum regarding the agency’s corroboration of the AFA rate. Id. According to

Commerce, that explanation demonstrated that the AFA rate “(1) was determined to be

reliable in the pre-initiation stage of the investigation; and (2) is relevant based on

information derived from the petition that gave rise to the investigation.” Id. at 15 & n.62

(citing I&D Mem. at Cmt. 2).

          B. Commerce’s Use of an Adverse Inference is Supported by
             Substantial Evidence and Reasoned Explanation

       At issue here is whether Commerce’s use of an adverse inference is supported

by substantial evidence and reasoned explanation. See Unicatch’s Opp’n Cmts. at 4–

13; Gov’t’s Reply Cmts. at 8–11; Pro-Team, 419 F. Supp. 3d at 1336–39 (sustaining

Commerce’s use of total facts otherwise available). Commerce may use an inference

that is adverse to the interests of a respondent when Commerce determines that the

respondent “has failed to cooperate by not acting to the best of its ability to comply with

a request for information.” 19 U.S.C. § 1677e(b). “Compliance with the ‘best of its

ability’ standard is determined by assessing whether a respondent has put forth its

maximum effort to provide Commerce with full and complete answers to all inquiries in

an investigation.” Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir.

2003). As discussed, Commerce determined that Unicatch’s conduct in this case did

not satisfy the “best of its ability” standard because Unicatch failed to submit a complete

Appeals for the Federal Circuit (“Federal Circuit”) concluded that Commerce must
reconsider one aspect of its calculation of that rate. See Mid Continent Steel & Wire,
Inc. v. United States, 940 F.3d 662, 673–75 (Fed. Cir. 2019). Commerce’s
redetermination is pending before the CIT. See Mid Continent Steel & Wire, Inc., et al.
v. United States, et al., Court No. 15-cv-00213 (CIT June 16, 2020).
Consol. Court No. 18-00027                                                        Page 10

cost reconciliation despite “multiple requests” that “contain[ed] clear instructions on what

information was necessary.” Remand Results at 11. While Unicatch argues that

Commerce’s use of an adverse inference is unsupported by substantial evidence,

Unicatch’s Opp’n Cmts. at 1–13, those arguments lack merit.

       Unicatch argues that it mistakenly believed that its cost reconciliation was

complete and that its mistake does not merit an adverse inference. Id. at 4–13. Here,

however, on three occasions Commerce instructed Unicatch to end its reconciliation

with its total submitted cost of manufacturing, and in each corresponding response

Unicatch failed to do so. Remand Results at 11–15. While the statute “does not require

perfection and recognizes that mistakes sometimes occur, it does not condone

inattentiveness [or] carelessness.” Nippon Steel, 337 F.3d at 1382 (emphasis added).

After three detailed requests for a complete cost reconciliation, Commerce reasonably

expected “more forthcoming responses” from Unicatch. Remand Results at 11. 7

       Unicatch further argues that Commerce overreached in using an adverse

inference because Unicatch “sought to correct its deficiencies in responding to a

7 Commerce characterizes Unicatch’s conduct as intentional, stating, for example, that
“Unicatch repeatedly refused to provide Commerce with a complete cost
reconciliation.” Remand Results at 13; see also, e.g., id. at 24. While the record
supports Commerce’s finding that Unicatch failed to cooperate fully with Commerce’s
request for a complete cost reconciliation, Commerce did not identify substantial
evidence demonstrating that Unicatch deliberately withheld information. Cf., e.g., id. at
12 (stating that Unicatch “simply did not put forth the effort or cooperation to respond
fully”). That discrepancy does not change the outcome, however, because it is well-
settled that “[t]he statutory trigger for Commerce’s consideration of an adverse inference
is simply a failure to cooperate to the best of respondent’s ability, regardless of
motivation or intent.” Nippon Steel, 337 F.3d at 1383.
Consol. Court No. 18-00027                                                      Page 11

supplemental questionnaire,” Unicatch’s Opp’n Cmts. at 6 & n.6 (quoting

Mannesmannrohren-Werke AG v. United States, 23 CIT 826, 842, 77 F. Supp. 2d 1302,

1316 (1999)), and any noncompliance was not “willful or deliberate,” id. at 6 & n.7

(quoting Fujian Mach. and Equip. Imp. & Exp. Corp. v. United States, 25 CIT 1150,

1177, 178 F. Supp. 2d 1305, 1334 (2001)); see also id. at 12. Unicatch’s reliance on

Mannesmannrohren-Werke AG and Fujian Machinary is misplaced. In each case, the

court sustained Commerce’s use of adverse facts available in the subsequent

redetermination that further explained why an adverse inference was merited in

connection with conduct not unlike the facts of this case. See Fujian Mach. and Equip.

Imp. & Exp. Corp. v. United States, 27 CIT 1059, 1067–68, 276 F. Supp. 2d 1371,

1378–79 (2003) (sustaining Commerce’s use of AFA based on record evidence of

“multiple failures” to provide requested information the respondent was able to provide);

Mannesmannrohren-Werke AG v. United States, 24 CIT 1082, 1090–91, 120 F. Supp.

2d 1075, 1081–83 (2000) (sustaining Commerce’s use of AFA when the respondent

simply repeated deficient information following Commerce’s requests for clarification in

two supplemental questionnaires).

      Unicatch also argues that “Commerce should have clarified . . . the precise

format for the information required” or again requested the complete cost reconciliation

“in its Third Supplemental Questionnaire.” Unicatch’s Opp’n Cmts. at 7 (citing Mukand,

Ltd. v. United States, 767 F.3d 1300, 1306 (Fed. Cir. 2014) (a case in which Commerce

issued four supplemental questionnaires and provided a sample chart for the

respondent to complete before applying AFA)). The Federal Circuit’s decision in
Consol. Court No. 18-00027                                                         Page 12

Mukand to sustain Commerce’s use of AFA did not, however, rest on the number of

questionnaires Commerce issued or Commerce’s provision of a sample chart. Rather,

the appellate court explained that the respondent’s evasiveness and sudden production

of requested information following Commerce’s use of AFA in its preliminary

determination justified Commerce’s use of an adverse inference in the final

determination. Mukand, 767 F.3d at 1307.

       While Mukand is factually distinct, the appellate court noted that Commerce

reasonably expected “more accurate and responsive answers to the questionnaire[s]”

that sought information that is “fundamental” to “the dumping analysis.” Id. So too here,

reliable and complete cost information is necessary for Commerce to “calculate

constructed value[,] . . establish a basis for comparison to U.S. price,” and, ultimately,

calculate an accurate dumping margin. Pro-Team, 419 F. Supp. 3d at 1339. Thus,

Commerce was within its discretion to use an adverse inference in order to incentivize

Unicatch to cooperate more fully in providing this information in future reviews. See

Maverick Tube Corp. v. United States, 857 F.3d 1353, 1360 (Fed. Cir. 2017) (explaining

that, in the absence of subpoena power, “the adverse facts statute . . . provide[s]

respondents with an incentive to cooperate with Commerce’s [administrative review]”)

(alteration and citations omitted). Accordingly, Commerce’s use of an adverse

inference is sustained.
Consol. Court No. 18-00027                                                            Page 13

           C. Commerce’s Selection of the 78.17 Percent AFA Rate Must Be
              Reconsidered

       When using an adverse inference to select from among the facts otherwise

available, Commerce may rely “on information derived from--(A) the petition, (B) a final

determination in the investigation . . . , (C) any previous [administrative] review . . . , or

(D) any other information placed on the record.” 19 U.S.C. § 1677e(b)(2). If

Commerce “relies on secondary information”—that is, information that was not

“obtained in the course of an investigation or review”—Commerce must, “to the extent

practicable, corroborate that information from independent sources that are reasonably

at [its] disposal.” Id. § 1677e(c)(1). Corroboration does not require Commerce “to

estimate what the . . . dumping margin would have been if [Unicatch] had cooperated”

or “demonstrate that the . . . dumping margin used by the [agency] reflects an alleged

commercial reality of [Unicatch].” Id. § 1677e(d)(3). Additionally, Commerce “is not

required to determine, or make any adjustments to, a . . . weighted average dumping

margin based on any assumptions about information the interested party would have

provided if [Unicatch] had complied with the request for information.” Id.

§ 1677e(b)(1)(B).

       Unicatch argues that the data underlying the petition rate “had no relationship

with actual prices and costs of Taiwan nails sold to the United States” in any segment of

this proceeding and the petition rate is aberrant in light of the rate Commerce calculated

for Pro-Team during the remand proceeding. Unicatch’s Opp’n Cmts. at 15–16. The

court understands Unicatch to argue that the petition rate was insufficiently
Consol. Court No. 18-00027                                                         Page 14

corroborated. The Government argues that Commerce’s selection of the petition rate is

lawful and supported by substantial evidence. Gov’t’s Reply Cmts. at 12–14.

      “Corroborat[ion] means that the [agency] will examine whether the secondary

information to be used has probative value.” 19 C.F.R. § 351.308(d). Commerce

evaluates the information’s probative value by “examin[ing] the reliability and relevance

of the information to be used.” I&D Mem. at 21 & n.83 (citation omitted).

      Commerce supported its determination that the petition rate “is reliable for

purposes of this review” by way of reference to the agency’s pre-initiation examination

of the information provided in the petition and corresponding discussion in the notice

regarding Commerce’s initiation of the investigation. Id. at 21–22 & nn.86–87 (citing

Certain Steel Nails From India, the Republic of Korea, Malaysia, the Sultanate of Oman,

Taiwan, the Republic of Turkey, and the Socialist Republic of Vietnam, 79 Fed. Reg.

36,019, 36,019–23 (Dep’t Commerce June 25, 2014) (initiation of less-than-fair-value

investigations). Commerce further determined that the petition rate is relevant,

explaining:

      The petitioner calculated normal value for the petition based on the
      experience of a surrogate producer of nails, adjusted for known
      differences between the surrogate producer and the industry of Taiwan,
      during the proposed [period of investigation]. The petitioner relied on
      financial statements of a producer of comparable merchandise operating
      in Taiwan to determine depreciation, [selling, general and administrative
      expenses], financial expenses, and profit rates. In calculating export
      price, the petitioner based U.S. price on a resale price from a
      distributor/trading company to its downstream customer in the U.S. during
      the period of investigation . . . . Based on the price quote by an
      unaffiliated distributor, the petitioner deducted from these prices
      movement expenses consistent with the sales delivery terms and adjusted
      for mark-ups from the distributors/trading companies. Based on this
Consol. Court No. 18-00027                                                           Page 15

       information, we determine that the dumping margin alleged in the Petition
       is relevant.

Id. at 22 (internal footnote citations omitted).

       The court cannot conclude that Commerce adequately corroborated the petition

rate. Corroboration requires a petition rate to meet a different standard than is

necessary at the pre-initiation stage of an investigation. Compare 19 U.S.C. § 1677e(c)

and 19 C.F.R. § 351.308(d) (discussed above), with 19 U.S.C. § 1673a(c)(1)(A)(i)

(directing Commerce, upon receipt of a petition and before initiating an investigation, to

use readily available sources to examine “the accuracy and adequacy of the evidence

provided in the petition” and “determine whether the petition alleges the elements

necessary for the imposition of a duty under [19 U.S.C. §] 1673 . . . and contains

information reasonably available to the petitioner supporting the allegations”). 8

Commerce has recognized this different standard in other administrative

determinations. See, e.g., Issues and Decision Mem. for the Final Determination of

Sales at Less Than Fair Value and Affirmative Final Determination of Critical

Circumstances: Certain Lined Paper Prods. from Indonesia, A-560-818 (Aug. 16, 2006),

available at https://enforcement.trade.gov/frn/summary/indonesia/E6-13470-1.pdf (last

visited Nov. 16, 2020) (finding that Commerce’s corroboration of a petition rate in an

investigation met “the higher standard applicable to preliminary and final

8 Commerce’s regulations also direct petitioners in an antidumping proceeding to
include in the petition “factual information” for Commerce to calculate export price,
constructed export price, and normal value. 19 C.F.R. § 351.202(b)(7)(B); see also 19
C.F.R. § 351.203(b)(1) (stating agency requirements for determining sufficiency of the
petition).
Consol. Court No. 18-00027                                                              Page 16

determinations” as compared to pre-initiation). Thus, “Commerce’s determination that

the . . . petition rate[ was] sufficient to warrant initiation of an investigation is not the

same as finding [that rate] reliable for determining a rate after the investigation has been

concluded.” Yantai Xinke Steel Structure Co. v. United States, 36 CIT 1035, 1042

(2012). 9

      “[T]he petition constitutes . . . ‘an allegation of dumping, not a determination of

dumping.’” Id. (quoting Zhejiang Native Produce & Animal By-Prods. Imp. & Exp. Corp.

v. United States, 35 CIT 1161, 1173 (2011)). Consistent with that observation, the

statute exempts Commerce from the corroboration requirement when it selects as an

AFA rate “any dumping margin” used “in a separate segment of the same proceeding.”

19 U.S.C. § 1677e(c)(2). Commerce did not, however, use this petition rate in the

original investigation, see supra note 6; thus, the rate remains an “unverified

allegation[]” that is subject to the corroboration requirement before Commerce may

utilize it. Uruguay Round Agreements Act, Statement of Administrative Action (“SAA”),

H.R. Doc. No. 103–316, vol. 1, at 870 (1994), reprinted in 1994 U.S.C.C.A.N. 4040,

9 While Yantai Xinke addressed—and rejected—Commerce’s use of a simple average
of the petition rates to calculate the rate assigned to separate rate respondents
pursuant to 19 U.S.C. § 1673d(c)(5)(B) and, thus, did not address 19 U.S.C.
§ 1677e(c)(1), 36 CIT at 1039–43, the court’s opinion is nevertheless instructive for its
insight into the limitations of Commerce’s pre-initiation evaluation of a petition rate when
the agency seeks to rely on that rate later in the proceeding.
Consol. Court No. 18-00027                                                      Page 17

4199 (“Secondary information may not be entirely reliable because, for example, as in

the case of the petition, it is based on unverified allegation.”). 10

       Here, Commerce has overlooked information reasonably at its disposal that

could inform the reliability and relevance of the petition rate—such as data underlying

the rates Commerce calculated for mandatory respondents in the investigation or the

instant review. See 19 U.S.C. § 1677e(c)(1) (instructing Commerce to corroborate

secondary “information from independent sources that are reasonably at [its] disposal”).

Thus, Commerce’s determination that the petition rate is reliable and relevant for

purposes of this administrative review, based on nothing more than its pre-initiation

review of the data, is unsupported by substantial evidence and reasoned explanation.

Accordingly, Commerce must reconsider or further explain its corroboration of the

petition rate.

       Unicatch also argues that Commerce failed to conduct the analysis discussed in

BMW of North America LLC v. United States, 926 F.3d 1291 (Fed. Cir. 2019) to ensure

that the AFA rate was not punitive. Unicatch’s Opp’n Cmts. at 13–15. Here, as

previously noted, Commerce followed its practice of selecting the higher of the highest

dumping margin alleged in the petition or the highest rate from any prior segment of the

proceeding, i.e., the investigation. Remand Results at 14. Commerce largely ignored

Unicatch’s arguments that the 78.17 percent rate was punitive, aberrational, and lacking

10The SAA “shall be regarded as an authoritative expression by the United States
concerning the interpretation and application of the Uruguay Round Agreements Act.”
19 U.S.C. §3512(d).
Consol. Court No. 18-00027                                                          Page 18

consideration of the totality of the circumstances or the seriousness of Unicatch’s

conduct. Cmts. in Resp. to Draft Results of Redetermination Pursuant to Court Remand

(Feb. 26, 2020) at 15–21, CRR 5, PRR 10, CRJA Tab 31 (discussing, inter alia, BMW,

926 F.3d at 1301). At most, Commerce pointed to Unicatch’s “multiple failures to supply

a complete reconciliation” to support the selection of the petition rate over the highest

calculated investigation rate, Remand Results at 15, which is the same rationale

Commerce supplied for its use of AFA, see id. at 11.

       Because the court is remanding Commerce’s selection of the petition rate as

AFA, the court defers further consideration of Unicatch’s arguments that the selected

petition rate was unduly punitive. On remand, Commerce may only continue to rely on

the petition rate if the agency identifies substantial evidence supporting its corroboration

of the rate and the agency’s use of that rate is otherwise lawful. Alternatively,

Commerce may choose another source of adverse facts available, in which case it must

corroborate that information if so required, see 19 U.S.C. § 1677e(c), and, as

necessary, adhere to the requirements set forth in 19 U.S.C. § 1677e(d)(2). 11

11 Unicatch relies on the court’s discussion of section 1677e(d)(2) in POSCO v. United
States, 42 CIT ___, ___, 296 F. Supp. 3d 1320, 1349 (2018), to support its argument
that Commerce must conduct further analysis of the petition rate. See Unicatch’s Opp’n
Cmts. at 14. In POSCO, the court explained that subsection (d)(2) directs Commerce to
base its selection of the dumping margin, which may include the highest margin
specified under subsection (d)(1), on an “evaluation . . . of the situation that resulted in
[the agency] using an adverse inference.” 296 F. Supp. 3d at 1349 (quoting 19 U.S.C.
§ 1677e(d)(2)) (alterations original). Subsection (d)(2), however, applies when
Commerce is “carrying out paragraph (1),” i.e., subsection (d)(1). 19 U.S.C.
§ 1677e(d)(2). Subsection (d)(1) contemplates Commerce’s use, as AFA, of “any
dumping margin from any segment of the proceeding under the applicable antidumping
Consol. Court No. 18-00027                                                          Page 19

 II.      Commerce’s Calculation of the Rate Assigned to Non-Examined
          Companies

          Hor Liang argues, inter alia, that the 39.09 percent all-others rate derived from

the simple average of Pro-Team’s zero percent rate and Unicatch’s 78.17 percent rate

is not reasonably reflective of Hor Liang’s dumping margin and is aberrational and

punitive. Hor Liang’s Opp’n Cmts. at 8–9. Because the court is remanding

Commerce’s selection of the 78.17 percent rate for Unicatch, the court will defer

resolution of Hor Liang’s arguments pending Commerce’s second remand

redetermination.

                                          CONCLUSION

          In accordance with the foregoing, it is hereby

          ORDERED that Commerce’s Remand Results are sustained with respect to

Commerce’s calculation of a weighted-average dumping margin of zero percent for Pro-

Team; it is further

          ORDERED that Commerce’s Remand Results are sustained with respect to

Commerce’s use of an adverse inference with respect to Unicatch; it is further

          ORDERED that Commerce’s Remand Results are remanded with respect to

Commerce’s selection of Unicatch’s AFA rate in accordance with this opinion; it is

further

order.” Id. § 1677e(d)(1)(B). Here, Commerce instead relied on the rate alleged in the
petition and section 1677e(d)(2) is inapplicable at this time.
Consol. Court No. 18-00027                                                       Page 20

         ORDERED that the court defers resolution of all challenges to the all-others rate

pending Commerce’s second redetermination; it is further

         ORDERED that Commerce shall file its remand redetermination on or before

February 1, 2021; it is further

         ORDERED that subsequent proceedings shall be governed by USCIT Rule

56.2(h); and it is further

         ORDERED that any comments or responsive comments must not exceed 4,000

words.

                                                  /s/   Mark A. Barnett
                                                  Mark A. Barnett, Judge

Dated: November 16, 2020
      New York, New York