Court Opinion

ID: 2793216
Source: CourtListenerOpinion
Date Created: 2015-04-13 16:01:41.08218+00
Date Added: 2024-06-11T12:10:38.233364
License: Public Domain

Slip Op. 15-32

            UNITED STATES COURT OF INTERNATIONAL TRADE
________________________________
FENGCHI IMP. & EXP. CO., LTD.   :
OF HAICHENG CITY, FENGCHI        :
REFRACTORIES CO. OF HAICHENG     :
CITY, and FEDMET RESOURCES       :
CORPORATION,                     :
                                 :
          Plaintiffs,            : Before: Nicholas Tsoucalas,
                                 :          Senior Judge
     v.                          :
                                 : Court No.: 13-00166
UNITED STATES,                   :
                                 :
          Defendant,             :
                                 :
          and                    :
                                 :
RESCO PRODUCTS, INC., and        :
ANH REFRACTORIES COMPANY,        :
                                 :
          Defendant-Intervenors.:

                             OPINION

[Plaintiffs’ motion for judgment on the agency record is denied.]

                                        Dated:April 13, 2015

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

Melissa M. Devine, Trial Attorney, Commercial Litigation Branch,
Civil Division, U.S. Department of Justice, of Washington, DC, for
defendant. With her on the brief were Stuart F. Delery, Assistant
Attorney General, Jeanne E. Davidson, Director, Patricia M.
McCarthy, Assistant Director, and Loren M. Preheim Trial Attorney,
Commercial Litigation Branch, Civil Division, U.S. Department of
Justice, of Washington, DC. Of counsel on the brief was Devin S.
Sikes, Attorney, Office of the Chief Counsel for Trade Enforcement
& Compliance, U.S. Department of Commerce, of Washington, DC.
Court No. 13-00166                                                    Page 2

Camelia C. Mazard, Robert R. Doyle, Jr., and Andre P. Barlow, Doyle
Barlow & Mazard PLLC of Washington, DC, for defendant-intervenor
Resco Products, Inc.

Joseph W. Dorn and Brian E. McGill, King & Spalding LLP, of
Washington, DC, for defendant-intervenor ANH Refractories Company.

             Tsoucalas, Senior Judge: Plaintiffs Fengchi Import and

Export Co., Ltd. of Haicheng City, Fengchi Refractories Co. of

Haicheng City, and Fedmet Resources Corporation (collectively

“Plaintiffs”), move for judgment on the agency record contesting

defendant United States Department of Commerce’s (“Commerce”)

determination in Certain Magnesia Carbon Bricks From the People’s

Republic of China: Final Results and Final Partial Rescission of

Countervailing Duty Administrative Review; 2010, 78 Fed. Reg.

22,235 (Apr. 15, 2013) (“Final Results”).        Commerce and defendant-

intervenors, Resco Products Inc. and ANH Refractories Company,

oppose Plaintiffs’ motion.        For the following reasons, Plaintiffs’

motion is denied.

                                  BACKGROUND

             Magnesia    carbon   bricks   (“MCBs”)    from   the   People’s

Republic of China (“PRC”) are subject to a countervailing duty

(“CVD”) order.    See Certain MCBs From the PRC: CVD Order, 75 Fed.

Reg. 57,442 (Sept. 21, 2010) (the “Order”).           On October 31, 2011,

Commerce initiated an administrative review of the Order, covering

sales of subject merchandise between August 2, 2010 and December

31,   2010   (“2010     Administrative   Review”).     See    Initiation   of
Court No. 13-00166                                                         Page 3

Antidumping      and    CVD    Administrative    Reviews   and   Request     for

Revocation in Part, 76 Fed. Reg. 67,133, 67,139–40 (Oct. 31, 2011).

Commerce named Fengchi Import and Export Co., Ltd. of Haicheng

City and Fengchi Refractories Co. of Haicheng City, as mandatory

respondents. 1     Id.         Fedmet, a domestic importer of Fengchi’s

merchandise, joined the review as an interested party.               See Letter

to   Commerce     re:    CVD    Order   on   Certain   MCBs   from   the    PRC,

Administrative Review (8/2/10–12/31/11): Entry of Appearance and

APO Application (Oct. 31, 2012), Public Rec. 102 at 1. 2

           On November 22, 2011, Commerce released U.S. Customs and

Border Patrol (“CPB”) data, covering Fengchi’s imports of MCBs

from the PRC made during the period of review (“POR”), and invited

Fengchi to comment on the data.              See Certain MCBs from the PRC:

Customs Data of U.S. Imports of Certain MCBs, (Nov. 22, 2011), PR

20 at 1.

           On February 21, 2012, Commerce issued a questionnaire to

the Government of China (“GOC”), with instructions to forward it

to Fengchi.      Letter to GOC re: First Administrative Review of CVD

1 Fengchi Import and Export Co., Ltd. of Haicheng City is a Chinese
exporter of MCBs, and Fengchi Refractories Co. of Haicheng City is
its affiliated producer.     See Final Results, 78 Fed. Reg. at
22,235.   Throughout the opinion, the court will refer to them
collectively as “Fengchi.”
2 Hereinafter, documents in the public record will be designated
“PR” and documents in the confidential record designated “CR”
without further specification except where relevant.
Court No. 13-00166                                                          Page 4

Order on Certain MCBs from the PRC, PR 65 at 1-2 (Feb. 21, 2012)

(“Initial Questionnaire”).           Commerce insisted that both the GOC

and Fengchi respond.        Id.    Commerce requested that Fengchi report

all domestic and foreign sales of both subject and non-subject

merchandise, as well as total exports of subject and non-subject

merchandise to the United States and other markets during the POR.

See   id.    at   section    III.         Specifically,    Commerce   requested

information on Fengchi’s sales and exports of magnesia alumina

carbon bricks (“MACBs”) during the POR. See id.

             On   March   29,     2012,   Fengchi    informed    Commerce    that,

because it had no entries, exports, or sales of subject merchandise

to the United States during the POR, there was no basis to conduct

a   review   of   Fengchi    and,    thus,    Commerce    should    rescind   the

administrative review of the company.               See Letter to Commerce re:

CVD Order on Certain MCBs from the PRC; Administrative Review

(8/2/10-12/31/10) (Mar. 29, 2012), PR 59 at 1-2.                Fengchi insisted

that because it did not have entries or sales during the POR, its

letter to Commerce should be considered a complete response.                  Id.

at 2.   Fengchi asserted that even though the entry data from the

U.S. Customs and Border Patrol (“CBP”) appears to show entries of

subject merchandise by Fengchi, the company was not in a position

to account for the entry data.            Id. at 3–4.

             Concurrent with 2010 Administrative Review, Commerce

conducted a scope inquiry to determine whether MACBs from the PRC
Court No. 13-00166                                                           Page 5

were subject to the Order.           See Certain MCBs from the PRC: Issues

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

Administrative Review, (Apr. 9, 2013) PR 117 at 1–2 (“IDM”).                     On

July 2, 2012, Commerce issued the final results of its scope

inquiry, finding that MACBs were within the scope of the Order.

See Certain MCBs from the PRC and Mexico: Final Scope Ruling —

Fedmet Resources Corporation at 1–2, Case Nos. A-201-837, A-570-

954 and C-570-955 (July 2, 2012) (“MACB Scope Ruling”).

               Prior to issuing the MACB Scope Ruling, Commerce placed

the CBP information on the record regarding Fengchi’s apparent

entries during the POR and requested comments from Fengchi on the

data.    Mem. re: MCBs from the PRC ( C-570-955): Requests for Entry

Summaries from CBP, CR 14 at 1 (June 20, 2012).                   Subsequently, on

July    2,   2012,     in    its   comments    to    Commerce’s    June   20,   2012

memorandum, Fengchi explained that its entries were incorrectly

categorized as subject merchandise by CBP.               Letter to Commerce re:

CVD Order on Certain MCBs from the PRC; Administrative Review

(8/2/10-12/31/10), CR 15 at 1–6 (July 2, 2012).                    Fengchi argued

that the description of the merchandise in these documents supports

its    claim    that   the    company    did   not    have   entries   of   subject

merchandise during the POR.             Id.

               On August 15, 2012, Commerce informed Fengchi that it

should have responded to its Initial Questionnaire issued on

February 21, 2012, because the CBP information had been placed on
Court No. 13-00166                                                          Page 6

the record and the MACB Scope Ruling had been issued, demonstrating

that Fengchi had made subject entries during the POR.                    Letter to

GOC re: First Administrative Review of CVD Order on Certain MCBs

from the PRC: Deficiency Letter Regarding Inadequate Questionnaire

Response, CR 17 at 1–3 (Aug. 15, 2012).               Additionally, Commerce

requested that Fengchi submit information with regards to its sales

of MACBs during the POR.          Id. at 2.

           On    August     16,   2012,   Fengchi    submitted     a   letter   to

Commerce objecting to its request, arguing that: (1) Fengchi

correctly reported that it had no entries of MCBs at the time

Commerce    issued    the     questionnaire;        (2)     Commerce’s     request

contradicts the time limits provided in 19 C.F.R. § 351.225(l)(4),

because    the    request     came   a    month     after    the   final     scope

determination and 289 days after the initiation of this review;

and (3) the request was unfair and burdensome. PR 72 at 1-12.

Fengchi also filed for an extension of ninety days to respond to

the questionnaire. PR 73 at 1-5.

           In response to Fengchi requesting an extension of time

to respond to Commerce’s initial questionnaire, Commerce extended

the deadline for filing a responses to the Initial Questionnaire

for both Fengchi and the GOC until October 1, 2012.                See Letter to

Fengchi re: First Administrative Review of the CVD Order on Certain

MCBs from the PRC: Fengchi's Extension Request, PR 78 at 1 (Aug.

28, 2012).       Subsequently on August 29, 2012, Fengchi informed
Court No. 13-00166                                          Page 7

Commerce that it would not respond to its Initial Questionnaire

arguing that Commerce’s request was contrary to the express terms

of 19 C.F.R. § 351.225(l)(4) and that Commerce’s untimely request

to report such sales was unreasonably burdensome and prejudicial.

See Letter to Fengchi re: CVD Order on Certain MCBs from the PRC;

Administrative Review, PR 81 at 2-3 (Aug. 29, 2012).

          On September 11, 2012, Commerce granted Fengchi a final

opportunity to respond its questionnaire by October 1, 2012, and

once again Fengchi declined to comply.   See Letter to Fengchi re:

First CVD Administrative Review of Certain MCBs from the PRC, PR

86 at 1–3 (September 11, 2012); see also Letter to Commerce re:

CVD Order on Certain MCBs from the PRC; CVD Administrative Review

(8/02/10-12/31/10), PR 95 at 1–2 (Oct. 1, 2012).

          Commerce issued the preliminary results of the 2010

Administrative Review in October 2012.   See Certain MCBs From the

PRC: 2010 CVD Administrative Review, 77 Fed. Reg. 61,397 (Oct. 9,

2012) (“Preliminary Results”).   See also Decision Memorandum for

Preliminary Results of CVD Administrative Review: Certain MCBs

from the PRC, PR 98 (Oct. 1, 2012) (“PRM”).   Commerce determined

that Fengchi’s refusal to provide information on its MACBs sales

constituted a failure to cooperate with the review to the best of

its ability and applied total adverse facts available (“AFA”).
Court No. 13-00166                                                             Page 8

PRM    at   6–9.     Commerce   assigned     a    262.80%       dumping   margin   to

Fengchi’s sales.       PRM at 8.

             Commerce    issued    the    Final       Results     in   April   2013,

upholding     the    Preliminary   Results       in    their    entirety.      Final

Results, 78 Fed. Reg. at 22,236.

                    JURISDICTION and STANDARD OF REVIEW

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

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

1930, 3 as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012). The court

will uphold Commerce’s final determination in a countervailing

duty    administrative      review       unless       it   is    “unsupported      by

substantial evidence on the record, or otherwise not in accordance

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

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

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

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

             Additionally, when reviewing an agency’s interpretation

of its regulations, the court must give substantial deference to

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

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

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

3Further citations to the Tariff Act of 1930 are to the relevant
portions of Title 19 of the U.S. Code, 2012 edition, and all
applicable amendments thereto.
Court No. 13-00166                                                  Page 9

according it “‘controlling weight unless it is plainly erroneous

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

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

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

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

own   regulations    is   broader   than   deference   to   the   agency’s

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

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

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

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

                               DISCUSSION

             Fengchi contests the following aspects of the Final

Results:      Commerce’s request for sales information on MACBs;

Commerce’s application of AFA; Commerce’s selection of 262.80% as

the AFA rate.       See Pls.’ Br. Supp. Mot. J. Agency R. at 7–23

(“Pls.’ Br.”).

             As an initial matter, the Court of Appeals for the

Federal Circuit (“CAFC”) issued an opinion overturning the MACB

Scope Ruling on June 20, 2014, after the completion of briefing in

this case.    See Fedmet Res. Corp. v. United States, 755 F.3d 912,

914 (Fed. Cir. 2014).       Plaintiffs argues in their brief that a

reversal of the MACB Scope Ruling will resolve the issues in this

case because “there would be no lawful basis for Commerce to impose

countervailing duties on [MACBs] under the [Order], and thus, no
Court No. 13-00166                                                    Page 10

lawful basis for Commerce to have directed Fengchi to answer the

CVD questionnaire in the administrative review with respect to

[MACBs].”     Pl.’s Br. 7–8.      The court must reject this argument.

The Fedmet litigation concerned the MACB Scope Ruling.             This case

concerns Commerce’s ability to request information on products

subject to a scope ruling during an administrative review and its

imposition of adverse facts available after Fengchi declined to

comply with that request.         Thus, the CAFC’s decision in Fedmet

does not resolve the legal issues raised in the instant case.

   I. Commerce’s Request for Information on Fengchi’s MACB Sales

            The first issue before the court is whether Commerce

properly requested that Fengchi provide information on its sales

of MACBs during the review.        As noted above, Fengchi declined to

provide such information on the theory that Commerce’s request

violated 19 C.F.R. § 351.225(l)(4).           As a result of Fengchi’s

refusal to provide information, Commerce imposed AFA based on

Fengchi’s refusal to provide the information.             Plaintiffs claim

that   Commerce’s    request     was   inconsistent   with    19   C.F.R.   §

351.225(l)(4) because Commerce issued the scope ruling on MACBs

245 days after the initiation of the review.              Pls.’ Br. at 9.

Alternatively,      Plaintiffs     claim    that   even      if    Commerce’s

interpretation of the regulation was proper, it was nevertheless

impractical for Commerce to request that information so late in

the review.    Id. at 15–17.
Court No. 13-00166                                                   Page 11

       A. Commerce’s interpretation of 19 C.F.R. § 351.225(l)(4)
                            was reasonable.

           Under 19 C.F.R § 351.225(l)(4), where Commerce issues a

scope ruling that a product is within the scope of an order within

ninety days of the initiation of an administrative review of that

same order, Commerce, “where practicable, will include sales of

that product for purposes of the review and will seek information

regarding such sales.”      19 C.F.R § 351.225(l)(4).         However, where

Commerce issues the scope ruling more than ninety days after the

initiation of the administrative review, Commerce “may consider

sales of the product for purposes of the review on the basis of

non-adverse facts available.”         Id.    “However, notwithstanding the

pendency   of   a   scope    inquiry,       if   [Commerce]   considers   it

appropriate, [Commerce] may request information concerning the

product that is the subject of the scope inquiry for purposes of

a review . . . .”    Id.

           Here, Commerce issued the scope ruling on MACBs 245 days

after initiating the administrative review at issue.             See PRM at

6.   As noted above, Commerce requested information on Fengchi’s

MACB sales shortly after issuing the scope ruling, see CR 17 at 2,

but Fengchi declined to provide the information, insisting that

Commerce’s request was improper.             See PR 81 at 2.         Commerce

insisted   that     its     request    was       consistent   with   section

351.225(l)(4) because the regulation does not prohibit Commerce
Court No. 13-00166                                                            Page 12

from soliciting information on products that are subject to a scope

ruling issued over ninety days after the review begins.                     See IDM

at 11–12.       Rather, according to Commerce, the regulation permits

Commerce to decline to collect information in such situations and

instead consider sales of the product on the basis of non-adverse

facts available.         Id.

              Plaintiffs insist that Commerce’s reading of section

351.225(l)(4) is unreasonable.                Instead, Plaintiffs suggest that

the regulation creates a “bright-line rule”: if the scope ruling

is    issued     within        ninety    days    of    the   initiation     of     the

administrative review, then Commerce will request information on

the product subject to that scope ruling if practicable, but if

the   scope     ruling    is    issued    more    than   ninety    days   after   the

initiation of the review, then Commerce may not request information

on the product and may only consider sales of the product based on

non-adverse facts available.             See Pls.’ Br. at 9–12.       According to

Plaintiffs, Commerce’s interpretation renders the ninety-day time

limit,    and    therefore       much    of     the   regulation    itself,      “mere

surplusage.” Id. at 13. Moreover, Plaintiffs insist that Commerce

indicated that their reading of the regulation was proper during

promulgation of the regulation and, in fact, acted in a manner

consistent with this interpretation in a prior administrative

review.   Id. at 11–15.
Court No. 13-00166                                                      Page 13

           The court must reject Plaintiffs’ interpretation because

it alters the plain meaning of the regulation.                 According to

Plaintiffs, where Commerce issues a scope ruling more than ninety

days after the initiation of an administrative review, Commerce

may consider sales of the product for purposes of the review, “but

only on the basis of non-adverse facts available.”                 Id. at 8–9

(emphasis added).     This “bright-line rule” reads the word “only”

into the second sentence of the regulation.                 However, section

351.225(l)(4) provides that in such situations, Commerce “may

consider sales of the product for purposes of the review on the

basis of non-adverse facts available.”         19 C.F.R. § 351.225(l)(4)

(emphasis added).     The language of the regulation is permissive

and   simply   does   not    proscribe    Commerce’s   power       to   request

information in the manner Plaintiffs suggest.

           Furthermore,      Plaintiffs    reliance    on    the    regulatory

history of section 351.225(l)(4) is misplaced.                 According to

Plaintiffs,    Commerce     adopted   their   interpretation       of   section

351.225(l)(4) at the preliminary rule making stage.             Pls.’ Br. at

11–13.   In particular, Plaintiffs rely on Commerce’s comment that,

when a final scope ruling is issued more than ninety days after

initiation of a review, it is “not practicable” to collect sales

information and therefore Commerce “will rely on non-adverse facts

available.”    Id. at 11 (citing Antidumping Duties; CVD: Proposed

Rules, 61 Fed. Reg. 7308, 7322 (Feb. 27, 1996)). However, Commerce
Court No. 13-00166                                                         Page 14

clearly departed from this interpretation by the final rule making

stage.     Commerce stated that section 351.225(l)(4) “provides,

among other things, that if [Commerce] determines after [ninety]

days of the initiation of a review that a product is included

within the scope of an order or suspended investigation, [Commerce]

may decline to seek sales information concerning the product for

purposes of the review.”           Antidumping Duties; CVD: Final Rule, 62

Fed. Reg. 27,296, 27,330 (May 19, 1997) (“Preamble”).                     Thus, at

the final rulemaking stage, Commerce did not limit itself to

reliance on non-adverse facts available, but instead provided

itself     with   flexibility        to    determine     whether     to    collect

information.      See id.

            Plaintiffs      also    rely   on   two   separate     statements    by

Commerce    at    the   final      rule    making     stage   to    support     its

interpretation.      First, Plaintiffs note that Commerce rejected a

request to extend the ninety-day period when it extends the

deadline for the preliminary results of a review, indicating that

Commerce did not intend to collect information where the scope

ruling is issued after the ninety-day period.                 See Pls.’ Br. at

11–12.     Plaintiffs misinterpret Commerce’s decision; Commerce

rejected the request because it generally makes the decision to

extend a deadline for the preliminary results of a review right

before that deadline expires and well after the ninety-day period

ends.    Preamble, 62 Fed. Reg. at 27,330.             Second, Plaintiffs note
Court No. 13-00166                                                       Page 15

that Commerce rejected a suggestion that it collect information

for a subsequent review when the scope ruling is issued after the

ninety-day period.          See Pls.’ Br. at 12.      This decision also does

not support Plaintiffs’ argument; Commerce rejected the suggestion

because it was unwilling to collect information for a future

review.    Preamble, 62 Fed. Reg. at 27,330.

             Ultimately,       Commerce’s       interpretation      of   section

351.225(l)(4)       was   consistent   with     the   plain   language   of   the

regulation.       Section 351.225(l)(4) does not proscribe Commerce’s

power to collect information on a respondent’s sales of a product

subject to a scope ruling issued over ninety-days after the

initiation of the review, so long as it is practicable to do so.

19 C.F.R. § 351.225.         It does, however, permit Commerce to decline

to collect such information and instead rely on non-adverse facts

available.        Id.     Contrary to Plaintiffs’ argument, Commerce’s

interpretation does not render any language in the regulation

meaningless: if the scope ruling is issued within ninety-days of

the initiation of the review, Commerce, where practicable, will

collect information on the product subject to that scope ruling;

if the scope ruling is issued more than ninety-days after the

initiation of the review, Commerce may collect information on the

product,     if    practicable,     but   may     decline     to   consider   the

respondent’s information and rely instead on non-adverse facts

available.        See id.     As discussed above, this interpretation is
Court No. 13-00166                                                   Page 16

consistent with Commerce’s discussion of section 351.225(l)(4)

when promulgating the final rule.           See Preamble, 62 Fed. Reg. at

27,330.     Because Commerce’s interpretation of the regulation was

not plainly erroneous or inconsistent with the regulation, the

court defers to Commerce’s reading of 19 C.F.R § 351.225(l)(4).

See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512, (1994)

(citations omitted); accord Viraj Group v. United States, 476 F.3d

1349, 1355 (Fed. Cir. 2007).

  B.     Commerce reasonably determined that it was practicable to
                    request MACBs sales information.

             Having    determined    that   Commerce’s    interpretation   of

section 351.225(l)(4) was reasonable, the court now considers

whether it was practicable for Commerce to request information on

Fengchi’s MACBs sales.            Plaintiffs insist that there was not

sufficient time remaining in the review for Commerce to consider

Fengchi’s sales of MACBs.         Pls.’ Br. at 15–17.

             The court must reject Plaintiffs’ assertion because it

was practicable for Commerce to request information on Fengchi’s

MACB sales in this proceeding.           Here, Commerce sent Fengchi the

Initial Questionnaire on February 21, 2012, PR 65 at 1–2, well

before     the   October    1,    2012   deadline   for    its   preliminary

determination.        PRM at 3.    Commerce repeatedly offered to extend

the deadline for Fengchi to provide the requested information.

See, e.g., CR 17 at 1, PR 71 at 1.           As discussed above, Commerce
Court No. 13-00166                                         Page 17

also offered Fengchi one final opportunity to comply on September

11, 2012, but once again, Fengchi declined to provide its MACB

sales information.   See PR 86 at 1–3.

          Accordingly, because it was practicable to consider

Fengchi’s MACBs sales at the time of the MACB Scope Ruling,

Commerce reasonably requested that data during the review. 4   See

19 C.F.R. § 351.225(l)(4).

       II. Commerce’s Application of Adverse Facts Available

          The next issue is whether Commerce properly relied on

AFA when determining Fengchi’s dumping margin.     As noted above,

Commerce found that AFA was appropriate because Fengchi refused to

provide information on its MACB sales.

          Commerce may apply AFA where “an interested party 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 the respondent has put forth its maximum

effort to provide Commerce with full and complete answers” to a

request for information.   Nippon Steel Corp. v. United States, 337

F.3d 1373, 1382 (Fed. Cir. 2003).

4Commerce also argues that it had the authority to request MACB
sales information at “any time during the proceeding” pursuant
to 19 C.F.R § 351.301(c)(2) (2012). Because Commerce properly
requested MACB sales information under 19 C.F.R § 351.225(l)(4),
the court declines to consider this alternative justification.
Court No. 13-00166                                                     Page 18

            Although it concedes that it did not provide information

on its MACB sales, Plaintiffs argue that Commerce erroneously

applied AFA because the request itself was improper.                 See Pls.’

Br. at 17–21.      As noted above, Plaintiffs insist that Commerce’s

request for Fengchi’s MACB sales information violated 19 C.F.R. §

351.225(l)(4).     Plaintiffs conclude that Commerce could not impose

AFA based on Fengchi’s failure to comply with an inappropriate

request for information.      See Pls.’ Br. at 19.      Plaintiffs rely on

Laclede Steel Co. v. United States, 18 CIT 965 (1994), where the

Court    overturned     Commerce’s   decision   to    impose     AFA   because

Commerce’s request for information was improper.          See Pls.’ Br. at

18–19 (citing Laclede Steel, 18 CIT at 973).

            Plaintiffs’ argument is unconvincing.        As this court has

already determined, Commerce’s request for Fengchi’s MACB sales

information was proper.         Accordingly, Plaintiffs’ reliance on

Laclede   Steel    is   misplaced.   Ultimately,     Fengchi’s    refusal   to

provide information on its MACB sales demonstrated a failure to

comply    with   Commerce’s   request   for   information,     and     Commerce

reasonably applied AFA.       See 19 U.S.C. § 1677e(b); Nippon Steel,

337 F.3d at 1382.

                  III. The Adverse Facts Available Rate

            Having determined that Commerce properly relied on AFA

to determine Fengchi’s dumping margin, the court now considers

whether Commerce properly selected 262.80% as the AFA rate.
Court No. 13-00166                                           Page 19

            When selecting a total AFA rate, Commerce typically

cannot calculate a rate for an uncooperative respondent because

the information required for such a calculation has not been

provided.   As a substitute, Commerce relies on various “secondary”

sources of information (the petition, the final determination from

the investigation, prior administrative reviews, or any other

information placed on the record), 19 U.S.C. § 1677e(b), (c), in

order to select a proxy that is “a reasonably accurate estimate of

the respondent's actual rate, albeit with some built-in increase

intended as a deterrent to non-compliance.”       F.lli De Cecco Di

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

1032 (Fed. Cir. 2000)(“De Cecco”).    When selecting an appropriate

total AFA proxy, “Commerce must balance the statutory objectives

of finding an accurate dumping margin and inducing compliance.”

Timken Co. v. United States, 354 F.3d 1334, 1345 (Fed. Cir. 2004).

The proxy’s purpose “is to provide respondents with an incentive

to   cooperate,   not   to   impose   punitive,   aberrational,   or

uncorroborated margins.”     De Cecco, 216 F.3d at 1032.   “Commerce

must select secondary information that has some grounding in

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

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

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

not select unreasonably high rates having no relationship to the
Court No. 13-00166                                                              Page 20

respondent’s actual dumping margin.” Id. at 1323 (citing De Cecco,

216 F.3d at 1032).

              The    requirements    articulated        by    the    CAFC      are    an

extension of the statute’s corroboration requirement.                           See De

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

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

practicable, corroborate that information from independent sources

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

corroborate secondary information, Commerce must find that it has

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

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

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

Galati S.A. v. United States, 31 CIT 730, 734, 491 F. Supp. 2d

1273, 1278 (2007); see KYD, 607 F.3d at 765–67.

              In the CVD context, Commerce follows a hierarchy when

selecting a proxy subsidy rate for an uncooperative respondent

because “unlike other types of information, such as publicly

available data on the national inflation rate of a given country

or   national       average   interest     rates,     there   typically         are   no

independent         sources   for   data    on      company-specific           benefits

resulting from countervailable subsidy programs.”                   Certain Kitchen

Appliance Shelving and Racks From the People's Republic of China:

Final Results of the CVD Administrative Review, 77 Fed. Reg. 21,744

(April 11, 2012) and accompanying Issues and Decision Memorandum
Court No. 13-00166                                                        Page 21

for the Final Results of the CVD Administrative Review of Certain

Kitchen Appliance Shelving and Racks from the People's Republic of

China at 4 (Apr. 4, 2012).          To select an AFA subsidy rate, Commerce

first attempts to apply the highest, above de minimis subsidy rate

calculated for the identical program from any segment of the

proceeding.       See    PRM   at    8.     Absent   a   calculated     above   de

minimis subsidy rate from an identical program, the Department

then   seeks      a     subsidy      rate     calculated     for    a     similar

program.    Id.      Absent such a rate, the Commerce then resorts to

the third step in its hierarchy, an above de minimis calculated

subsidy rate for any program from any CVD proceeding involving the

country in which the subject merchandise is produced, so long as

the producer of the subject merchandise or the industry to which

it belongs could have used the program for which the rates were

calculated.    Id.

            In this case, Commerce assigned Fengchi a rate of 262.80%

which reflected the sum of rates assigned for 22 programs that

Commerce found countervailable in the investigation.                    See Final

Results to CVD Administrative Review of Certain MCBs from the PRC:

Application of AFA for Non-Cooperative Companies, PR 118 at 2, 7

(Apr. 9, 2013); IDM at 18.           Since both Fengchi and the PRC failed

to respond to Commerce’s questionnaire, Commerce made the adverse

inference     that      Fengchi     had     facilities     and/or   cross-owned

affiliates that received subsidies under all of the sub-national
Court No. 13-00166                                                                     Page 22

programs     which      Commerce          determined        countervailable        in        the

investigation.         Id. at 2.            The rates for these programs ranged

0.51% to 25%, covering direct tax, other income tax, indirect tax,

loan, export restraints, less than adequate remuneration, and

grant programs. See id. at 7. For half of these programs, Commerce

applied a rate based upon partial AFA, 21.24%, which it had

calculated       for     a         mandatory       respondent       in     the     original

investigation.         IDM at 19; PR 118 at 4–5.              Commerce reasoned that

the rates for these programs “were calculated in recent CVD final

investigations or final results of review for fully cooperating

respondents” and that, consequently, the rates “reflect the actual

subsidy    practices          of    PRC’s     national,      provincial,         and    local

governments.”           IDM    at     18.         Commerce   also    found       the        rates

appropriate because they were “based upon information about the

same or similar programs for periods close in time to the POR in

the instant case.”           Id.     Finally, Commerce determined that nothing

on the record called into question the reliability of these

calculated rates.         Id.

             Plaintiffs        argue        that    the   262.80%    rate    applied           to

Fengchi “is unreasonable, overly punitive, and not reflective of

Fengchi’s commercial reality,” because it “is more than 10 times

higher    than    the    only        actual       subsidy    rate   calculated          for    a

cooperating      respondent          in     the    proceeding.”      Pl.    Br.        at    22.

Plaintiffs also contend that Commerce’s use of the 21.24% rate in
Court No. 13-00166                                          Page 23

its calculation was unreasonable because it was “derived from

partial AFA and thus was not calculated entirely based on actual

data.” Id. at 23.

          On the issue of corroboration, the court finds that

Commerce corroborated Fengchi’s AFA rate to the extent practicable

under 19 U.S.C. § 1677e(c).     Both Fengchi and the GOC refused to

provide any information during the administrative review regarding

their use of countervailable subsidies, thus Commerce’s ability to

corroborate its secondary information was limited by Fengchi’s

lack of cooperation.     The rates Commerce used to corroborate

Fengchi’s AFA rate were reliable because they were calculated in

recent CVD final investigations or final results of review.     PRM

at 6. Furthermore, the rates were relevant because they were based

upon information about the same or similar programs.     Id.   With

regard to the programs for which there was no program-type match,

Commerce selected the highest calculated subsidy rate for any PRC

program from which the non-cooperative companies could receive a

benefit to use as AFA.     Id.    These rates were calculated for

periods close in time to the POR in the instant case.           Id.

Additionally, Commerce observed that it assigned a total AFA rate

to Fengchi that is comparable to the AFA rate assigned to a

mandatory respondent in the investigation that ceased to cooperate

and withheld information. Id.
Court No. 13-00166                                                    Page 24

           The court is not persuaded by Plaintiffs’ argument that

Commerce chose a rate that was unreasonable, overly punitive, and

not reflective of Fengchi’s commercial reality.             Nor is the court

convinced that Commerce unreasonably relied on the 21.24% rate

based upon partial AFA.         Due to Fengchi’s lack of cooperation

during the review, there is no company specific data on the record

regarding Fengchi’s participation in countervailable programs.

Because there were no other independent sources of data on company-

specific   benefits,   Commerce       was   limited   in    its   ability   to

corroborate the information used to calculate the AFA rate.            Thus,

Plaintiffs’    arguments   do   not   undermine    the     reasonableness   of

Commerce’s corroboration given the limited information available

to Commerce.     See Essar Steel, Ltd. v. United States, 753 F.3d

1368, 1374 (Fed. Cir. 2014).

           Ultimately,     section    1677e(c)    requires    that   Commerce

“shall, to the extent practicable, corroborate that information

from independent sources that are reasonably at their disposal.”

19 U.S.C. § 1677e(c).       As discussed above, both Fengchi and the

GOC failed to cooperate with Commerce and provide company-specific

information regarding countervailable benefits Fengchi received

during the POR.    Since there were no other independent sources of

data on company-specific benefits, Commerce was limited in its

ability to corroborate the information used to calculate the AFA

rate. Accordingly, in light of the failure of Fengchi to cooperate
Court No. 13-00166                                                     Page 25

and the reasonably accurate nature of the secondary information

that   Commerce    used    under   §   1677e(b),    Commerce     satisfied   the

requirement of corroborating the 262.80% AFA rate “to the extent

practicable.” Id.

                               IV. Conclusion

             For   the    foregoing    reasons,    the   Final   Results     were

supported by substantial evidence and otherwise in accordance with

law.     Plaintiffs’ motion for judgment on the agency record is

denied.    Judgment will be entered accordingly.

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