Court Opinion

ID: 4156429
Source: CourtListenerOpinion
Date Created: 2017-03-29 18:02:05.557833+00
Date Added: 2024-06-11T07:46:40.266370
License: Public Domain

Slip Op. 17-32

               UNITED STATES COURT OF INTERNATIONAL TRADE

 COOPER TIRE & RUBBER COMPANY,
 COOPER (KUNSHAN) TIRE CO., LTD.,
 AND COOPER CHENGSHAN
 (SHANDONG) TIRE CO., LTD.,

                       Plaintiffs,
                v.

 UNITED STATES,
                                                   Before: Timothy C. Stanceu, Chief Judge
                       Defendant,
                                                   Court No. 15-00251
                and

 THE UNITED STEEL, PAPER AND
 FORESTRY, RUBBER,
 MANUFACTURING, ENERGY, ALLIED
 INDUSTRIAL AND SERVICE WORKERS
 INTERNATIONAL UNION, AFL-CIO,
 CLC,

                       Defendant-Intervenor.

                                     OPINION AND ORDER

[Remanding for redetermination a cash deposit rate applied to secure estimated antidumping
duties]

                                                                 Dated:March 29, 2017

       Gregory C. Dorris, Pepper Hamilton LLP, of Washington, D.C., for plaintiffs.

       John J. Todor, Senior Trial Counsel, Civil Division, U.S. Department of Justice, of
Washington, D.C., for defendant. With him on the brief were Benjamin C. Mizer, Principal
Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr.,
Assistant Director. Of counsel was Mercedes C. Morno, Office of the Chief Counsel for Trade
Enforcement & Compliance, U.S. Department of Commerce.

       Geert De Prest, Stewart and Stewart, of Washington, D.C., for defendant-intervenor.
With him on the brief were Terence P. Stewart, Phillip A. Butler, and Nicholas J. Birch.
Court No. 15-00251                                                                           Page 2

       Stanceu, Chief Judge: Plaintiffs challenge the antidumping duty cash deposit rate of

11.12% ad valorem that the International Trade Administration, U.S. Department of Commerce

(“Commerce” or the “Department”) applied to imports of passenger car and light truck tires that

they produced and exported from the People’s Republic of China. For the reasons discussed

below, the court sets the cash deposit rate aside as contrary to law.

                                         I. BACKGROUND

                                 A. The Parties in this Litigation

       Plaintiffs Cooper (Kunshan) Tire Co., Ltd. and Cooper Chengshan (Shandong) Tire Co.,

Ltd. are affiliated Chinese producers and exporters of tires for passenger cars and light trucks.

Plaintiff Cooper Tire & Rubber Company is an affiliated exporter of the subject merchandise of

these producers. In this Opinion, the court refers to plaintiffs collectively as “Cooper.”

       Cooper was a respondent in parallel antidumping duty (“AD”) and countervailing duty

(“CVD”) investigations conducted by Commerce. The petitioner in the investigations was the

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service

Workers International Union (the “USW”), which is the defendant-intervenor in this litigation.

             B. The Contested Determination and the Contested Cash Deposit Rate

       In June 2015, Commerce issued a decision published as Antidumping Duty Investigation

of Certain Passenger Vehicle and Light Truck Tires From the People’s Republic of China: Final

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

Circumstances, In Part, 80 Fed. Reg. 34,893 (Int’l Trade Admin. June 18, 2015) (“Final AD

Determination”). Commerce subsequently issued an “Amended Final Determination”

accompanied by antidumping duty and countervailing duty orders, published as Certain

Passenger Vehicle and Light Truck Tires From the People’s Republic of China: Amended Final

Affirmative Antidumping Duty Determination and Antidumping Duty Order; and Amended Final
Court No. 15-00251                                                                        Page 3

Affirmative Countervailing Duty Determination and Countervailing Duty Order, 80 Fed. Reg.

47,902 (Int’l Trade Admin. Aug. 10, 2015) (“Amended Final Determination”). In the Amended

Final Determination, Commerce assigned Cooper an estimated dumping margin of 25.84%. Id.

at 47,905. Commerce nominally set the cash deposit rate at the same rate as the margin but made

a downward adjustment resulting in an applied cash deposit rate of 11.12% for the merchandise

Cooper exported to the United States. Amended Final Determination, 80 Fed. Reg. at 47,904

n.19; see also Final AD Determination, 80 Fed. Reg. at 34,897. Cooper claims that the

downward adjustment was improperly calculated and is therefore insufficient. Commerce

determined a CVD cash deposit rate of 20.73% for Cooper, Amended Final Determination,

80 Fed. Reg. at 47,907, which Cooper does not contest in this litigation.

                          C. The Parallel AD and CVD Investigations

       On July 21, 2014, Commerce initiated the parallel AD and CVD investigations. Certain

Passenger Vehicle and Light Truck Tires From the People’s Republic of China: Initiation of

Antidumping Duty Investigation, 79 Fed. Reg. 42,292 (Int’l Trade Admin. July 21, 2014);

Certain Passenger Vehicle and Light Truck Tires From the People’s Republic of China:

Initiation of Countervailing Duty Investigation, 79 Fed. Reg. 42,285 (Int’l Trade Admin. July 21,

2014). On January 27, 2015, Commerce published its preliminary less-than-fair value

determination in the AD investigation (“Preliminary AD Determination”). Certain Passenger

Vehicle and Light Truck Tires From the People’s Republic of China: Preliminary Determination

of Sales at Less Than Fair Value; Preliminary Affirmative Determination of Critical

Circumstances; In Part and Postponement of Final Determination, 80 Fed. Reg. 4,250 (Int’l

Trade Admin. Jan. 27, 2015) (“Preliminary AD Determination”).

       Commerce initially selected Shandong Yongsheng Rubber Group Co., Ltd.

(“Yongsheng”) and GITI Tire Global Trading Pte. Ltd. and its affiliates (“GITI”) as the only two
Court No. 15-00251                                                                             Page 4

mandatory respondents in the AD investigation. Antidumping Duty Investigation of Certain

Passenger Vehicle and Light Truck Tires from the People’s Republic of China: Respondent

Selection 4-5 (Int’l Trade Admin. Aug. 27, 2014), ECF No. 33 (Admin.R.Doc. No. 304).

Commerce initially chose the same two companies as the mandatory respondents in the parallel

CVD investigation. See Def.-Int. the USW’s Opp’n to Pls.’ Mot. for J. on the Agency R., Ex. 1

at 4-5 (Apr. 14, 2016), ECF No. 30 (“USW’s Br.”). In the Preliminary AD Determination,

Commerce stated that Yongsheng “did not demonstrate that it is entitled to a separate rate” and

that “[a]ccordingly, we consider Yongsheng to be part of the PRC-Wide Entity.” Preliminary

AD Determination, 80 Fed. Reg. at 4,252. The “PRC-Wide Entity” includes the Chinese

exporters and producers Commerce determines not to have demonstrated independence from the

government of the PRC.

       Prior to publication of the Preliminary AD Determination, Commerce selected Sailun

Group Co., Ltd. (“Sailun”) to replace Yongsheng as the second mandatory respondent in the AD

investigation. See Antidumping Duty Investigation of Certain Passenger Vehicle and Light

Truck Tires from the People’s Republic of China: Selection of Additional Mandatory Respondent

(Int’l Trade Admin. Oct. 7, 2014), ECF. No. 33 (Admin.R.Doc. No. 617). Because Commerce

decided not to select Cooper as a mandatory respondent, and because it rejected Cooper’s request

to be named a voluntary respondent, in the AD investigation (decisions Cooper does not

challenge in this litigation), Cooper did not receive an individual weighted average margin in the

AD investigation. Instead, Cooper was assigned the rate assigned to all “separate rate”

respondents in that investigation, i.e., respondents that qualified for a rate separate from the rate

Commerce applied to the PRC-Wide Entity. Commerce, however, chose Cooper as the second

mandatory respondent in the CVD investigation. USW’s Br., Ex. 2 at 2. GITI remained as a

mandatory respondent in both investigations.
Court No. 15-00251                                                                          Page 5

       On June 18, 2015, Commerce published the final determination in the antidumping duty

investigation, Final AD Determination, 80 Fed. Reg. at 34,893, which Commerce amended on

August 10, 2015 for correction of ministerial errors, Amended Final Determination, 80 Fed. Reg.

at 47,902. The final individual weighted average dumping margins in the Amended Final

Determination were 30.74% for GITI and 14.35% for Sailun; Commerce assigned a rate of

25.84% to the separate rate respondents in the antidumping duty investigation, including Cooper,

calculated as the weighted average of the two individual margins. Amended Final

Determination, 80 Fed. Reg. at 47,905.

       In the Final AD Determination, Commerce announced that the cash deposit rate for

merchandise produced or exported by Cooper would be calculated by making two downward

adjustments to Cooper’s nominal cash deposit rate, which was the same as the final dumping

margin (determined at that time as 25.30%, which Commerce applied to Cooper and all other

separate rate respondents). Final AD Determination, 80 Fed. Reg. at 34,897. For the first

adjustment to the cash deposit rate, Commerce stated that it would subtract from the percentage

the “export subsidy rate” of 11.13%, which Commerce determined individually for Cooper in the

course of the companion countervailing duty investigation. Id. The other separate rate

respondents in the AD investigation received an “all-others” export subsidy downward

adjustment of 13.53% to their cash deposit rate. Id.

       For the second adjustment, Commerce announced that it would make a further reduction

in the cash deposit rate for Cooper, as well as for the other separate rate respondents, of 3.59%

“to account for estimated domestic subsidy pass-through.” Id. (footnote omitted). As applied to

Cooper’s amended final dumping margin and nominal cash deposit rate of 25.84% as determined

in the Amended Final Results, the two downward adjustments resulted in the applied AD cash
Court No. 15-00251                                                                           Page 6

deposit rate of 11.12% that Cooper contests in this action. See Amended Final Determination,

80 Fed. Reg. at 47,904 n.19.

          D. Cooper’s Initiation of this Action and the USW’s Intervention as of Right

       On September 8, 2015, Cooper filed its summons, Summons, ECF No. 1; Cooper filed its

complaint on October 7, 2015, Compl., ECF No. 9. On January 15, 2016, Cooper moved for

judgment on the agency record pursuant to USCIT R. 56.2. See Rule 56.2 Mot. for J. on the

Agency R. of Pls. Cooper Tire & Rubber Company, Cooper (Kunshan) Tire Co., Ltd., and

Cooper Chengshan (Shandong) Tire Co., Ltd. and Mem. in Supp. (Jan. 15, 2016), ECF No. 22

(“Cooper’s Br.”). This motion, opposed by defendant United States, is now before the court.

Def.’s Resp. to Pls.’ Rule 56.2 Mot. for J. upon the Agency R. (Apr. 14, 2016), ECF No. 31

(“Def.’s Br.”).

       On November 10, 2015, the court granted the USW’s motion to intervene as of right in

this action as defendant-intervenor. Order (Nov. 10, 2015), ECF No. 15. The USW also opposes

Cooper’s Rule 56.2 motion. See USW’s Br.

       The court held oral argument on Cooper’s Rule 56.2 motion on September 22, 2016.

                                          II. DISCUSSION

                               A. Jurisdiction and Standard of Review

       The court exercises jurisdiction according to section 201 of the Customs Court Act of

1980, 28 U.S.C. § 1581(c). In reviewing a determination in an antidumping duty investigation,

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).
Court No. 15-00251                                                                            Page 7

                                   B. The Statutory Framework

       Section 735(c)(1)(B)(i) of the Tariff Act of 1930 as amended (“Tariff Act”) provides that

Commerce, upon reaching a final affirmative less-than-fair-value determination in an

antidumping duty investigation, shall “determine the estimated weighted average dumping

margin for each exporter and producer individually investigated,” 19 U.S.C.

§ 1673d(c)(1)(B)(i)(I), and “determine . . . the estimated all-others rate for all exporters and

producers not individually investigated,” id. § 1673d(c)(1)(B)(i)(II). 1

       Commerce determines a “dumping margin” according to “the amount by which the

normal value[ 2] exceeds the export price or constructed export price of the subject

merchandise.” 3 19 U.S.C. § 1677(35)(A). A “weighted average dumping margin” is calculated

       1
         Citations herein to the United States Code are to the 2012 edition. Citations to the Code
of Federal Regulations are to the 2015 edition.
       2
         Although usually determined from the price at which a product identical or similar to
the subject merchandise is sold or offered for sale in the home market of the exporting country,
see 19 U.S.C. §§ 1677(16), 1677b(a), the normal value of subject merchandise exported from a
country, such as China, that Commerce considers to be a nonmarket economy country is
determined according to specialized procedures. Under these procedures, Commerce typically
determines normal value “on the basis of the value of the factors of production utilized in
producing the merchandise,” adding amounts for expenses and profit. Id. § 1677b(c)(1). The
“factors of production” include labor hours and the quantities of materials used in production.
Id. § 1677b(c)(3).
       3
          “Export price” is an adjusted price determined from the “price at which the subject
merchandise is first sold (or agreed to be sold) before the date of importation by the producer or
exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in
the United States or to an unaffiliated purchaser for exportation to the United States . . . .”
19 U.S.C. § 1677a(a). “Constructed export price” is an adjusted price determined from the
“price at which the subject merchandise is first sold (or agreed to be sold) in the United States
before or after the date of importation by or for the account of the producer or exporter of such
merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated
with the producer or exporter . . . .” Id. § 1677a(b).
Court No. 15-00251                                                                            Page 8

as “the percentage determined by dividing the aggregate dumping margins determined for a

specific exporter or producer by the aggregate export prices and constructed export prices of

such exporter or producer.” Id. § 1677(35)(B).

                       1. Estimated Weighted Average Dumping Margins

       The statute describes, in 19 U.S.C. § 1673d(c)(1)(B)(i)(I), the individual weighted

average dumping margin and, in § 1673d(c)(1)(B)(i)(II), the all-others rate as “estimated,”

consistent with the retrospective statutory scheme for assessment of antidumping duties, under

which Commerce, at a later time, determines the amount of antidumping duty that actually is to

be assessed and collected upon the liquidation of entries of subject merchandise. See 19 C.F.R.

§ 351.212 (“[T]he United States uses a ‘retrospective’ assessment system under which final

liability for antidumping and countervailing duties is determined after merchandise is

imported.”).

                                2. The Cash Deposit Requirement

       Further to the retrospective statutory scheme, the Tariff Act provides for security for the

future collection of antidumping duties. Commerce “shall order the posting of a cash deposit,

bond, or other security,” as Commerce “deems appropriate, for each entry of the subject

merchandise . . . .” 19 U.S.C. § 1673d(c)(1)(B)(ii). The statute directs that the cash deposit or

other security be “in an amount based on the estimated weighted average dumping margin or the

estimated all-others rate, whichever is applicable.” 4 Id. Although generally allowing the posting

of bonds as security for “provisional measures,” i.e., antidumping duty deposits on importations

       4
          Under a parallel countervailing duty provision in the Tariff Act, Commerce is to order
security for potential countervailing duty liability upon reaching a final affirmative determination
that a countervailable subsidy is being provided. 19 U.S.C. § 1671d(c)(1)(B)(ii).
Court No. 15-00251                                                                          Page 9

of merchandise subject to an AD investigation made prior to the issuance of an antidumping duty

order, the Department’s regulations provide that “[g]enerally, upon the issuance of an order,

importers no longer may post bonds as security for antidumping or countervailing duties, but

instead must make a cash deposit of estimated duties.” 19 C.F.R. § 351.211(a).

           3. The “Export Subsidy” and “Domestic Subsidy Pass-Through” Provisions

       The “export subsidy” provision of section 772 of the Tariff Act, 19 U.S.C.

§ 1677a(c)(1)(C), directs Commerce to increase the “[t]he price used to establish export price

and constructed export price” (the “starting price”) 5 by “the amount of any countervailable duty

imposed on the subject merchandise under part 1 of this subtitle to offset an export subsidy.” 6

19 U.S.C. § 1677a(c)(1)(C). In determining the estimated weighted average dumping margins of

the two mandatory respondents, Commerce did not make upward adjustments to the starting

prices for any countervailable duty imposed to offset an export subsidy. As a result, the all-

others rate of 25.84% that Commerce applied to Cooper and the other separate rate respondents,

which was derived from the individually determined margins, does not reflect an adjustment

made under § 1677a(c)(1)(C). During the investigation, Commerce explained that “[u]nlike in

administrative reviews, the Department calculates the adjustment for export subsidies in

investigations not in the margin-calculation program, but in the cash-deposit instructions issued

       5
          Commerce refers to the price used to establish export price or constructed export price,
prior to upward and downward adjustments, as the “starting price.” 19 C.F.R. § 351.402(a).
       6
         The reference to “part 1 of this subtitle” is a reference to “Part I—Imposition of
Countervailing Duties” and to “Subtitle IV—Countervailing and Antidumping Duties” of the
Tariff Act of 1930.
Court No. 15-00251                                                                           Page 10

to [U.S. Customs and Border Protection (“CBP”)].” Final AD Determination, 80 Fed. Reg. at

34,897 n.12.

       The “domestic subsidy pass-through” provision of section 777A(f) of the Tariff Act,

19 U.S.C. § 1677f-1(f), applies only to imported merchandise (1) that is from a nonmarket

economy country and (2) for which Commerce determines normal value according to the method

of 19 U.S.C. § 1677b(c), both of which conditions applied in the instant investigation. Described

in general terms, this provision applies if Commerce determines that a countervailable subsidy

(other than an export subsidy referred to in 19 U.S.C. § 1677a(c)(1)(C)) has been provided that

reduced the average price of the subject imports and increased the weighted average dumping

margin. 19 U.S.C. § 1677f-1(f). In that event, Commerce is directed to reduce the antidumping

duty by the amount of the increase in the dumping margin that Commerce can reasonably

estimate. Id.

                                 C. Summary of Plaintiffs’ Claims

       Cooper’s principal claim is that Commerce should not have based the downward

adjustment for 19 U.S.C. § 1677a(c)(1)(C), i.e., the export subsidy adjustment, on information

specific to Cooper that was on the record of the parallel countervailing duty investigation.

Cooper claims that Commerce erred in not allowing Cooper the benefit of a 13.53% downward

export subsidy adjustment, which was the adjustment Commerce allowed for all other separate

rate respondents in the AD investigation. Cooper points out that “even though Cooper is an AD

separate rate respondent like the 62 other separate rate respondents, the AD cash deposit rate for

Cooper is 11.12% ad valorem and that of all the other 62 separate rate respondents is 8.72% ad

valorem.” Cooper’s Br. 7 (citation omitted). According to Cooper, Commerce, lacking a

rational basis to treat Cooper differently than it treated the other separate rate respondents, acted

arbitrarily and capriciously in limiting the export subsidy deduction to 11.13%. Cooper submits
Court No. 15-00251                                                                          Page 11

that Commerce should have applied to its subject merchandise a cash deposit requirement

calculated as 8.72%, i.e., 25.84% (the all-others AD rate and nominal cash deposit) adjusted

downward by 13.53% (the export subsidy adjustment applied to the cash deposit rate for the

other separate rate respondents in the AD investigation) and by 3.59% (the domestic pass-

through subsidy adjustment applied to the cash deposit rate for those other separate rate

respondents).

       Cooper’s second claim is in the alternative and is conditioned on the court’s deciding,

contrary to Cooper’s first claim, that Commerce had a rational basis to treat Cooper differently

than other AD separate rate respondents. If the court were to so decide, Cooper’s claim would

be that Commerce erred in making a downward adjustment of only 3.59% to account for

domestic “pass-through” subsidies pursuant to 19 U.S.C. § 1677f-1(f). Cooper argues that

Commerce should be directed to use the record evidence from the CVD investigation pertaining

to Cooper, under which, Cooper submits, the domestic subsidy adjustment to the cash deposit

rate would be 8.68%, not 3.59%. Cooper maintains that if Commerce uses 11.13% as the export

subsidy adjustment, which is based on Cooper’s own data, then as a matter of consistency it also

must use Cooper’s actual domestic pass-through adjustment. Cooper’s Br. 19. This would result

in a cash deposit rate of 6.03% for Cooper, calculated by subtracting 11.13% and 8.68% from

25.84%.

       Cooper’s claims are confined to the 11.12% adjusted cash deposit rate. Cooper does not

challenge the calculation of the estimated all-others rate of 25.84% that Commerce applied to it.

Nor does Cooper claim that Commerce acted unlawfully in effectuating 19 U.S.C. § 1677a(c)(1)(C)

by making a downward adjustment to its nominal cash deposit rate of 25.84% rather than by

adjusting the export price (“EP”) or constructed export price (“CEP”) of the mandatory respondents.
Court No. 15-00251                                                                           Page 12

Cooper makes no claim that Commerce acted contrary to law in implementing 19 U.S.C.

§ 1677f-1(f) by means of a downward adjustment to its nominal cash deposit rate.

                           D. Adjudication of Cooper’s Primary Claim

        In summary, Cooper’s argument is that Commerce, lacking a rational basis to treat

Cooper differently than it treated the other separate rate respondents, acted arbitrarily and

capriciously in making the 11.13% export subsidy adjustment. Cooper’s Br. 14-15. The

Department’s methodology, in Cooper’s view, was applied with no valid explanation, was

designed to apply only to respondents in Cooper’s specific situation (a separate rate respondent

in the AD investigation and a mandatory respondent in the CVD investigation), and “ensures that

such respondents will receive a cash deposit rate that most likely is higher than (or at best the

same as) the other separate rate respondents.” Cooper’s Br. 14. Arguing that Commerce chose

to offset the cash deposit rate by the lower of the rate specific to Cooper or that of the separate

rate respondents, Cooper comments that its “actual data will only be used to make it suffer.”

Id. at 16.

        Under 19 U.S.C. § 1516a(b)(1)(B)(i), 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 . . . .” This standard of review has been recognized to

encompass the “arbitrary and capricious” standard established under the Administrative

Procedure Act (“APA”). Changzhou Wujin Fine Chemical Factory Co., 701 F.3d 1367, 1377

(Fed. Cir. 2012) (citing Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281,

284 (1974)). “[A]n agency action is arbitrary when the agency offer[s] insufficient reasons for

treating similar situations differently.” RHP Bearings Ltd. v. United States, 288 F.3d 1334, 1347

(Fed. Cir. 2002) (quoting Transactive Corp. v. United States, 91 F.3d 232, 237 (D.C. Cir. 1996)).

For an agency action to be upheld, it must “offer some rationale that could explain the
Court No. 15-00251                                                                          Page 13

maintenance of different standards for similarly situated claimants, or it must explain why such

claimants are in fact not similarly situated.” Serv. Women’s Action Network v. Sec’y of Veterans

Affairs, 815 F.3d 1369, 1380 (Fed. Cir. 2016).

       The uncontested record facts pertaining to the cash deposits did not provide Commerce a

rational basis upon which to treat Cooper differently than the other separate rate respondents.

While Commerce had a basis for treating Cooper differently, it was not a rational basis because

it relied upon a method of determining an estimated antidumping duty rate that was unrelated to

Cooper’s future antidumping duty liability. The basis for the different treatment was the

Department’s selection of Cooper as a mandatory respondent in the parallel countervailing duty

investigation. That provided Commerce with data from which it could calculate, at 11.13%, a

percentage for the export subsidy adjustment that was individual to Cooper. Commerce could

not do so for the merchandise of the other AD separate rate respondents, who were not

mandatory respondents in the CVD investigation. Commerce reasoned that “for the final CVD

determination, the Department has determined that Cooper has received export subsidies” that

“are countervailed at a lower rate than the weighted-average export subsidy rate applied to the

AD mandatory respondents, upon which Cooper’s antidumping duty is based.” Decision

Memorandum for the Final Determination in the Antidumping Duty Investigation of Certain

Passenger Vehicle and Light Truck Tires from the People’s Republic of China, A-570-016, at 21

(Int’l Trade Admin. June 11, 2015) (footnote omitted), available at

http://enforcement.trade.gov/frn/summary/prc/2015-15058-1.pdf (last visited Mar. 21, 2017). The

“weighted-average export subsidy rate applied to the AD mandatory respondents” was 13.53%,

which Commerce used to adjust the cash deposit rates of the separate rate respondents in the AD

investigation other than Cooper. Commerce also concluded that “[a]lthough Cooper’s dumping

margin is based on the rates for the mandatory respondents in the AD investigation, there is no
Court No. 15-00251                                                                            Page 14

double remedy applied to Cooper once its AD rate is adjusted for its calculated export subsidy

rate.” Id.

       As the Tariff Act provides in 19 U.S.C. § 1673d(c)(1)(B)(ii) and related provisions, the

cash deposit or other security for merchandise exported or produced by any respondent,

including a respondent not individually investigated, is to be based on an estimate of the

antidumping duty that in the future will be imposed on that merchandise. Therefore, there could

have been a rational basis for treating Cooper differently than the other separate rate respondents

in the AD investigation only if the difference in Cooper’s treatment as to the export subsidy

adjustment were rationally related to estimated future antidumping duties. Under the

Department’s method of calculating the cash deposits, it was not.

       The statute provides separately for “individually investigated” exporters and producers,

19 U.S.C. § 1673d(c)(1)(B)(i)(I), and for “all exporters and producers not individually

investigated,” id. § 1673d(c)(1)(B)(i)(II). Upon a final affirmative less-than-fair-value

determination, each of the former receives an individual “estimated weighted average dumping

margin.” Id. § 1673d(c)(1)(B)(i)(I). The latter receive an “estimated all-others rate.” Id.

§ 1673d(c)(1)(B)(i)(II). The statute draws the same basic distinction with respect to the cash

deposit or other security.

       Commerce sets the cash deposit rate as “security” for the potential antidumping duty

liability according to its authority under 19 U.S.C. § 1673d(c)(1)(B)(ii), under which Commerce

“shall order the posting of a cash deposit, bond, or other security, as [Commerce] deems

appropriate, for each entry of the subject merchandise in an amount based on the estimated

weighted average dumping margin or the estimated all-others rate, whichever is applicable.” Id.

§ 1673d(c)(1)(B)(ii) (emphasis added). Thus, the statutory scheme distinguishes between

individually investigated respondents and all other respondents, both as to the type of weighted
Court No. 15-00251                                                                          Page 15

average dumping margin each type receives and as to the security for future antidumping duty

liability that Commerce is to order. In contrast to the “estimated” rate, which is an estimate of

the potential antidumping duty liability, the actual antidumping duty ordinarily is determined

upon completion of an administrative review of the order; an exception occurs where, for

example, no review of a respondent has been completed, in which event the cash deposit rate

becomes the assessment rate. 7 See 19 C.F.R. § 351.212.

       If reviewed, Cooper may receive an individual weighted average dumping margin in the

first administrative review if Commerce chooses it for individual examination. See 19 U.S.C.

§ 1677f-1(c). Because such a margin must be individual to Cooper, it will not depend on, and it

will not be related to, the margin or margins Commerce assigns in the review to respondents who

are reviewed but not individually examined. Instead, Commerce will calculate the export price

(or constructed export price) of Cooper’s subject merchandise according to Cooper’s own data.

The individual calculation of EP or CEP will include an individual adjustment made for any

countervailable export subsidy imposed. See 19 U.S.C. § 1677a(c)(1)(C) (increasing the starting

price for EP or CEP by “the amount of any countervailing duty imposed on the subject

merchandise . . . to offset an export subsidy” (emphasis added)). In other words, if Cooper is

       7
          In a notice published subsequent to this action (of which the court takes judicial notice),
Commerce announced that a request for review of Cooper was received for the first
administrative review of the AD order. Initiation of Antidumping and Countervailing Duty
Administrative Reviews, 81 Fed. Reg. 71,061 (Int’l Trade Admin. Oct. 14, 2016). If reviewed,
Cooper either will be an individually examined respondent in the first review or will be reviewed
but not individually examined. See 19 U.S.C. § 1677f-1(c). In the unlikely event that all
requests for review of Cooper are effectively withdrawn, entries of Cooper’s merchandise will be
assessed antidumping duties at “the cash deposit rate applicable at the time merchandise was
entered.” 19 C.F.R. § 351.212(a). It is possible to interpret this regulation to mean that the
assessment rate would be the adjusted cash deposit rate (in which case Cooper would be treated
differently than any other separate rate respondent in the AD investigation for which no review
was requested), but the regulations are not clear on the point.
Court No. 15-00251                                                                          Page 16

individually examined in the first review, Cooper will not receive a dumping margin determined

by a method parallel to the “hybrid” method Commerce used to calculate its adjusted cash

deposit in the AD investigation, which combines an all-others antidumping duty margin and an

individually-determined export subsidy adjustment. Notably, the statute ties the export subsidy

adjustment to the specific export prices or constructed export prices of a respondent that is

individually investigated (in an investigation) or that is individually examined (in a review), not

to the margin of an uninvestigated or non-individually-examined respondent or to the U.S. prices

at which such a respondent’s subject merchandise is sold.

       Nor will Cooper receive a dumping margin determined by a method parallel to the

Department’s hybrid method of calculating the adjusted cash deposit if Cooper is reviewed but

not selected for individual examination in the administrative review. In that event, Commerce

will be required to apply any adjustment for export subsidies in calculating EP or CEP, and

therefore in calculating the individual weighted average margins, for the individually examined

respondents. See 19 U.S.C. § 1677a(c)(1)(C). In the investigation, Commerce has indicated that

in an AD review, it makes the export subsidy adjustment “in the margin-calculation program.”

Final AD Determination, 80 Fed. Reg. at 34,897 n.12 (“Unlike in administrative reviews, the

Department calculates the adjustment for export subsidies in investigations not in the margin-

calculation program, but in the cash-deposit instructions issued to CBP.” (emphasis added)).

Based on the statutory scheme, and consistent with the procedure the Department announced, a

margin for a reviewed respondent that is not individually examined in the first administrative

review will not be affected by its own individual export subsidy adjustment in that review.

       In conclusion, the cash deposit rate Commerce applied to Cooper’s merchandise in the

antidumping duty investigation is designated by statute as an estimate of the future antidumping

duty liability. In this instance, however, Commerce determined the contested cash deposit rate
Court No. 15-00251                                                                            Page 17

according to a method unrelated to the future antidumping duties that will be owed on that

merchandise. That the estimate might turn out to be a reasonable estimate of future AD liability

in a numerical sense is not sufficient to save the decision where, as here, the method by which

the estimate was derived cannot be justified under the relevant statutory provisions. In

subjecting Cooper’s merchandise to a cash deposit that varied from the cash deposit applied to

all other separate rate respondents in the antidumping duty investigation, Commerce acted

arbitrarily and capriciously and, therefore, impermissibly.

       Because the court finds merit in Cooper’s primary claim, the court does not consider the

claim Cooper makes in the alternative.

       Defendant takes the position that Commerce acted permissibly in making the 11.13%

export subsidy adjustment to the cash deposit rate, arguing that “Commerce reasonably looked to

the actual export subsidy rate that would be assessed on Cooper’s subject merchandise and

applied that amount for Cooper’s export subsidy adjustment.” Def.’s Br. 21. According to

defendant, “Commerce’s actions were consistent with the statute and moreover, ensured that the

export subsidy adjustment credited Cooper for the export subsidy rate that will be applied to it.”

Id. This argument fails to confront the problem the court has identified. As the court has

explained, the export subsidy adjustment that will be made in the first periodic administrative

review will be specific to the export prices or constructed export prices of an individually

examined respondent, and if Cooper is individually examined, any adjustment will be made to its

own EP or CEP starting prices. If not, any adjustment Cooper receives will be that of the

mandatory respondents. Because the “hybrid” method Commerce employed as a means of

estimating future AD duty liability has no basis in the statute, Commerce acted arbitrarily and

capriciously in treating Cooper differently from the other separate rate respondents in the

investigation. Therefore, defendant is not correct in arguing that the adjustment Commerce
Court No. 15-00251                                                                         Page 18

made “ensured that the export subsidy adjustment credited Cooper for the export subsidy rate

that will be applied to it.” Id.

        Defendant-intervenor’s argument is also unpersuasive. The USW argues that the export

subsidy adjustment is mandated by the statute, requiring no additional demonstration in the

AD investigation and reflecting the presumption that export subsidies directly contribute to the

lowering of import prices. USW’s Br. 10. The USW points out that “[w]hen there is not yet a

countervailing duty order, the agency performs the adjustment for export subsidies by reducing

the antidumping deposit rate by the CVD deposit rate attributable to the export subsidy as found

in the parallel CVD investigation.” Id. at 11. Cooper, however, does not contest the

Department’s practice of making the export subsidy adjustment to the cash deposit rate rather

than in a margin analysis when it is conducting the AD investigation. The USW’s argument

does not provide a convincing reason why Commerce did not act arbitrarily and capriciously in

treating Cooper differently than other separate rate respondents in the investigation, and it does

not address the problem posed by the Department’s using a method of estimating future AD

liability that does not accord with what will occur in the subsequent administrative review.

                                   E. Remedy Sought by Cooper

        On its primary claim, Cooper argues that “[t]he Court should order the Department on

remand to determine Cooper’s AD cash deposit rate the same as all other separate rate

respondents.” Cooper’s Br. 19. Because it was arbitrary and capricious for Commerce to assign

to Cooper’s subject merchandise an adjusted cash deposit rate that differed from the cash deposit

rate assigned to the subject merchandise of the other separate rate respondents, the court agrees

that Cooper is entitled to this remedy. To date, Cooper has not sought injunctive or other

equitable relief as to the implementation of the remedy it is pursuing.
Court No. 15-00251                                                                         Page 19

       Because this matter is time sensitive, the court is ordering that Commerce expedite its

issuance of its decision upon remand (the “Remand Redetermination”). For the same reason, the

court is ordering the parties to address in their comment submissions the issue of when the

remedy will be effectuated in instructions issued to U.S. Customs and Border Protection.

                                        III. CONCLUSION

       For the reasons stated in the foregoing, the court concludes that the Department’s method

of determining Cooper’s cash deposit rate was arbitrary and capricious and, accordingly, that the

determination of the cash deposit rate must be set aside as unlawful.

       Therefore, upon consideration of the contested decision and all papers and proceedings

herein, and upon due deliberation, it is hereby

       ORDERED that Commerce, within fifteen days of the issuance of this Opinion and
Order, shall issue a redetermination upon remand (“Remand Redetermination”) in which it
redetermines in accordance with this Opinion and Order the contested cash deposit rate and
informs the court of the date by which it will place the redetermined cash deposit rate into effect
by means of instructions issued to U.S. Customs and Border Protection; it is further

        ORDERED that plaintiffs and defendant-intervenor may submit comments on the
Remand Redetermination within ten days of the filing of the Remand Redetermination; it is
further

       ORDERED that in their comment submissions the parties address the issue of when the
remedy ordered by the court should be effectuated in instructions issued to U.S. Customs and
Border Protection; and it is further

        ORDERED that defendant may respond to plaintiffs’ comments within ten days of the
filing of such comments.

                                                             /s/ Timothy C. Stanceu
                                                             Timothy C. Stanceu
                                                             Chief Judge

Dated: March 29, 2017
       New York, New York