Court Opinion

ID: 818540
Source: CourtListenerOpinion
Date Created: 2013-02-03 08:25:33.862767+00
Date Added: 2024-06-11T15:37:04.671003
License: Public Domain

Slip Op. 05-126

                  UNITED STATES COURT OF INTERNATIONAL TRADE

 HEBEI METALS & MINERALS IMPORT &
 EXPORT CORPORATION AND HEBEI
 WUXIN METALS & MINERALS TRADING
 CO., LTD.,

                          Plaintiffs,                           Before: Restani, Chief Judge

                          v.                                    Court No. 03-00442

 UNITED STATES,

                          Defendant.

                                               OPINION

[Results of Commerce’s Second Remand Redetermination Regarding Surrogate Value for Coal in Non-
Market Economy Anti-Dumping Duty Margin Calculation Sustained.]

                                                                 Dated: September 22, 2005

       Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, (Bruce M. Mitchell, Mark E. Pardo,
and Paul G. Figueroa) for plaintiff.

        Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia M. McCarthy,
Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice
(David S. Silverbrand), Philip Curtin, Office of the Chief Counsel for Import Administration, United States
Department of Commerce, of counsel, for defendant.

RESTANI, Chief Judge:

        This litigation began with Plaintiffs Hebei Metals & Minerals Import & Export Corporation and

Hebei Wuxin Metals & Minerals Trading Co., Ltd. (referred to collectively hereinafter as “Hebei”)
Court No. 03–00442                                                                               Page 2

challenging three surrogate values used by the United States Department of Commerce (“Commerce” or

“the Department”) in calculating the antidumping duty margin for lawn and garden steel fence posts from

the People’s Republic of China (“PRC”). See Hebei Metals & Minerals Imp. & Exp. Corp. v. United

States, Slip Op. 04-88 (Ct. Int’l Trade July 19, 2004) [hereinafter Hebei Metals I]. After the court's

review of Commerce’s first remand determination, only one surrogate value remained at issue:Commerce’s

use of Indian import statistics data, rather than the domestic data advocated by Hebei, to value coal used

in drying the subject fence posts’ coating. See Hebei Metals & Minerals Imp. & Exp. Corp. v. United

States, 366 F. Supp. 2d 1264 (Ct. Int’l Trade 2005) [hereinafter Hebei Metals II]. Because neither party

could cite record evidence to make the selection of a surrogate coal value more than a speculative choice,

Hebei Metals II ordered Commerce to re-open the record in order to obtain information that would

support a surrogate coal value and to adhere to its conditional preference for domestic surrogate data in

reaching its decision. Id., 366 F. Supp. 2d at 1276–77.1

        The results of Commerce’s inquiry are now before the court. See Final Results of Redetermination

Pursuant to Remand, Hebei Metals & Minerals Imp. & Exp. Corp. and Hebei Wuxin Metals & Minerals

Trading Co., Ltd. v. United States (Dep’t Commerce July 20, 2005) [hereinafter “Second Remand

        1
           The court assumes familiarity with Hebei Metals I and Hebei Metals II. Hebei Metals I
reviewed the margin calculations made in Final Determination of Sales at Less Than Fair Value: Lawn
and Garden Fence Posts from the People’s Republic of China, 68 Fed. Reg. 20,373 (Dep’t
Commerce April 25, 2003) [hereinafter Final Determination], and explained in Decision Memorandum
for the Final Determination of the Antidumping Duty Investigation of Lawn and Garden Steel Fence
Posts from the People’s Republic of China (Dep’t Commerce April 18, 2003), P.R. 158, Pls.’ App.,
Ex. 2.
Court No. 03–00442                                                                                    Page 3

Determination”]. In the Second Remand Determination, Commerce used Indian domestic price data to

value coal instead of the Indian import statistics it used previously. Commerce tried unsuccessfully to obtain

information from Hebei regarding the type of coal used in the production of the subject fence posts and

found that Hebei failed to cooperate by not acting to the best of its ability in responding to its requests for

information. Second Remand Determ. at 17. On this basis and pursuant to 19 U.S.C. § 1677e(b) (2000),

Commerce applied adverse facts available (“AFA”) in selecting from the Indian domestic price data on the

record. Id. at 17. Hebei challenges the application of AFA, arguing—for the first time in this

litigation—that information pertaining to the coal factor of production constitutes “very minor data” that it

should not be expected to have. See Hebei Comments on Second Remand at 9. Hebei also seeks Rule

11 sanctions against the Government on the basis of alleged harassment and unnecessary delay. See Fed.

R. Civ. P. 11. Because Commerce properly applied AFA and did not violate Rule 11, the Second

Remand Determination is affirmed.

                                             BACKGROUND

        Commerce prepared the Second Remand Determination in response to Hebei Metals II, which

provided the following remand instructions:

        On remand, Commerce shall re-open the record to add evidence. Commerce may add
        any relevant evidence, but it must either:

                 (1)     seek evidence of the type of coal used by Hebei in its production
                         process, and non-aberrational price data that best relates to this coal
                         type, if the record does not already contain such data; or, if that is
                         deemed impractical at this stage,

                 (2)     obtain evidence of the type or types of coal normally used for drying steel
                 fence posts in China or India and non-aberrational price data that        b e s t
Court No. 03–00442                                                                                   Page 4

                relates to such coal type(s), if the record does not already contain        such data.

        In either scenario, Commerce shall adhere to its conditional preference for domestic
        surrogate data or Commerce shall state that it is deviating from this practice and provide
        a rational explanation for doing so.

        If Commerce again decides to use the “others” provision of coal in the Indian Import
        Statistics, it must (1) provide record evidence that this provision at least roughly
        corresponds to the type of coal used to dry steel fence posts; (2) determine whether the
        type of coal used by Hebei or a reasonably comparable type is reflected in the TERI
        domestic data, and (3) provide a reasonable explanation as to why the "others" import data
        more accurately reflects the costs incurred in producing the subject merchandise. In any
        event, Commerce may not support the use of import data in the surrogate coal value on
        the basis of tax-exclusivity if there is no record evidence to indicate that the Indian coal
        market prices are distorted by taxes and/or duties. Further, the other reasons thus far
        offered for Commerce's choice of import coal data have been found insufficient and will
        not sustain the choice.

366 F. Supp. 2d at 1276–77.

        Twenty days after Hebei Metals II was issued, Commerce sent a supplemental questionnaire to

Hebei, asking it to provide (1) “complete and detailed information regarding the type and grade of coal

used by Hebei during the POI [period of investigation] to dry steel fence posts;” (2) “an industry expert

chemical analysis demonstrating the useful heat value (UHV) of the type and grade of coal used by Hebei

during the POI;” and (3) “worksheets that illustrate how the costs reported for coal consumption during

the POI on the audited financial statements reconcile to the general ledger and trial balance, materials sub-

ledgers, production records, and inventory records.” Letter fromCommerce to Grunfeld, Desiderio (Mar.

30, 2005), P.R. Doc. 43, Def.’s App., Tab 1, at 1–2 [hereinafter First Supplemental Questionnaire].

Commerce also invited Hebei to submit additional information regarding (4) “evidence of the type or types

of coal normally used for drying steel fence posts in the PRC or India; (5) “non-aberrational price data that
Court No. 03–00442                                                                               Page 5

best relates to the type or types of coal used by Hebei during the POI;” or (6) “information that is

contemporaneous with the POI.” Id., Def.’s App., Tab 1, at 2.

        Hebei responded on April 8, 2005. See Letter from Grunfeld, Desiderio to Commerce (April 8,

2005), P.R. Doc. 43, Def.’s App., Tab 2 [hereinafter First Supplemental Response]. In answering

Commerce’s inquiries regarding the type of coal it used, Hebei responded that all its reported coal

consumption was consumed by a subcontractor [hereinafter “Subcontractor Y”] to “one of the companies

[hereinafter “Company X”] that produced the subject merchandise for Hebei.” Id., Def.’s App., Tab 2,

at 1. Hebei explained that Company X

        no longer uses [Subcontractor Y] as a subcontractor and has been unable to obtain any
        information from [Subcontractor Y] detailing the specific grade and type of coal it used
        three years ago for drying fence posts. Hebei and [Company X] never kept such records
        in their ordinary course of business.

Id., Def.’s App., Tab 2, at 1. Hebei also stated that it was unable to provide an industry expert chemical

analysis of the coal used by Subcontractor Y “because there is no existing sample of this coal. In its

ordinary course of business, Hebei does not keep samples of coal or records regarding coal used by its

subcontractors.” Id., Def.’s App., Tab 2, at 1.

        Hebei followed its First Supplemental Response by submitting domestic Indian coal prices for

2001-2002 published by the Tata Energy Research Institute’s Energy Data Directory & Yearbook (the

“2001-2002 TERI data”), which updated the 2000-2001 TERI data already on the record. Letter from

Grunfeld, Desiderio to Commerce (April 15, 2005), P.R. Doc. 43, Def.’s App., Tab 3 [hereinafter Second

Supplemental Response]. In this submission, Hebei stated that

        in light of the Court’s recognition that the record does not contain precise information
Court No. 03–00442                                                                                 Page 6

        regarding the grade of coal used by Hebei during the POI, it is more accurate to calculate
        a surrogate value for coal using the average prices for all grades and types of coal
        contained in this TERI data.

 Id., Def.’s App., Tab 3, at 2.

        On April 22, 2005, the Government moved for a 60-day extension of time in which to file the

remand results because “Hebei did not provide the information Commerce requested of it.” Def.’s Mot.

for Time (Apr. 22, 2005). The motion was granted, allowing Commerce to file the remand results on or

before July 8, 2005. Order (May 16, 2005).

        In the meantime, Commerce asked Hebei for more information. Commerce asked Hebei to explain

in detail the steps it took to contact its subcontractors in order to obtain information about the coal used

and to provide all available correspondence between these parties. Letter from Commerce to Grunfeld,

Desiderio (Apr. 26, 2005), P.R. Doc. 43, Def.’s App., Tab 4, at 1–2 [hereinafter Second Supplemental

Questionnaire]. Hebei responded merely that it contacted Company X and Subcontractor Y “by telephone

and asked for the requested information. There is no written correspondence related to this information

request.” Letter from Grunfeld, Desiderio to Commerce (May 2, 2005) P.R. Doc. 43, Def.’s App. Tab

5, at 1 [hereinafter Third Supplemental Response].

        In response to Commerce’s inquiry as to why it was not necessary for Hebei or its subcontractor

to know the coal quality specifications, Hebei stated that

        the coal consumption reported by Hebei in the investigation was used by [Subcontractor
        Y], an unaffiliated subcontractor whose task was to apply a coating to the fence posts.
        The coal was merely used for heat to help dry this coating. Hebei or [Company X] were
        only concerned that the fence posts they received from [Subcontractor Y] had been
        properly coated. They had no concern with the method [Subcontractor Y] used to
        accomplish this task. It is both unreasonable and irrational to assume that Hebie [sic]
Court No. 03–00442                                                                               Page 7

        would take an interest in the grade, type or UHV value of the coal used by its
        subcontractor in its drying room.

        Presumably, [Subcontractor Y] used the least expensive coal available since drying a
        coating on fence posts does not require the generation of an excessive amount of heat or
        energy.

Third Supp. Response, Def.’s App., Tab 5, at 1–2. For the same reason, Hebei also explained that neither

it nor Company X had any records pertaining to coal grade or type. Id., Def.’s App., Tab 5, at 2.

        Responding to a question about the identity of the subcontractor that Company X “currently use[s]

to provide coal in the production of fence posts,” Hebei stated that Company X

        never used a subcontractor to “provide” coal. [Subcontractor Y’s] job was to apply a
        coating to the fence posts, and it was [Subcontractor Y’s] own choice to assist the drying
        of this coating by using coal heat. Other subcontractors accomplished this task using
        electricity, which is why [Subcontractor Y] was the only subcontractor to report coal
        consumption.

Id., Def.’s App., Tab 5, at 2.

        When asked to about the standard type or types of coal used in the Indian or PRC markets, Hebei

repeated its position that coal was merely used in the drying process and added that “there is no industry

standard for the type or grade of coal that should be used to dry a coating on fence posts.” Id., Def.’s

App., Tab 5, at 3.

        Finally, Commerce asked Hebei to explain its position that the domestic TERI data provide a better

surrogate value than the import statistics used previously. Hebei responded that the TERI data conformed

to the preference for domestic data and referenced information it was submitting from Canadian and

American web sites to show that the drying of coatings is a low-heat operation requiring only cheaper coal

rather than more expensive imported coal. Id., Def.’s App., Tab 5, at 4.
Court No. 03–00442                                                                               Page 8

        Commerce obtained a partial extension of time on July 7, 2005, which allowed filing of the remand

results on or before July 21, 2005. See Order (July 7, 2005). While its motion for an extension of time

was pending and before Hebei had filed its opposition to that motion, Commerce sent Hebei a fourth and

finalquestionnaire, seeking additional information about the 2001-2002 TERI data. Letter fromCommerce

to Grundfeld, Desiderio (June 27, 2005), P.R. Doc. 43, Def.’s App., Tab 6. Hebei replied to

Commerce’s TERI questions on July 5, 2005. Letter from Grunfeld, Desiderio to Commerce (July 5,

2005), P.R. Doc. 43, Def.’s App., Tab 7 [hereinafter Fourth Supplemental Response].

        Commerce issued a preliminary remand determinationon July 14, 2005, in which it used the 2001-

2002 TERI domestic data but applied AFA. Hebei filed comments in opposition to the proposed

application of AFA.

        Commerce maintained its use of AFA in the final remand results, which were filed with the court

on July 21, 2005. In the Second Remand Determination, Commerce found that the 2001-2002 TERI data

is exclusive of taxes and duties and is the best data source for a surrogate coal value. See Second Remand

Determ. at 2 (citing Tata Energy Research Institute’s Energy Data Directory & Yearbook for 2001/2002

[hereinafter TERI Data]). Commerce applied AFA on the basis of what it found to be Hebei’s “insufficient

and/or confusing submissions” and in order to “ensure that Hebei ‘would not benefit from its lack of

cooperation.’” Second Remand Determ. at 18. In this vein, Commerce believed

        [i]t would not be appropriate for the Department to reward Hebei by using the surrogate
        value suggested by Hebei, the TERI steam coal averages of grades A, B, C and D, when
        it provided no information on the record to demonstrate the appropriateness of this
        recommended surrogate value. Thus, in applying AFA, the Department finds it most
        appropriate to use the simple average of the highest coal grade, coal grade A, in the
        2001/2002 TERI Data as the surrogate value for coal.
Court No. 03–00442                                                                                   Page 9

Id. at 18–19. The revised surrogate coal valuation resulted in a slightly decreased weighted-average

antidumping duty margin, which fell to 6.49 percent from the 6.52 percent margin calculated in the First

Remand Determination.2 Second Remand Determ. at 22.

                         JURISDICTION AND STANDARD OF REVIEW

        The court has jurisdiction over this case pursuant to 28 U.S.C. § 1581(c) (2000) and 19 U.S.C.

§ 1516a(a)(2)(B)(i) (2000). Commerce’s antidumping duty calculation shall be sustained if it is supported

by substantial evidence and is otherwise in accordance with law. See 19 U.S.C. § 1516a(b)(1)(B).

                                              DISCUSSION

I.      COMMERCE PROPERLY APPLIED ADVERSE FACTS AVAILABLE IN SELECTING A SURROGATE
        COAL VALUE

        When Commerce receives insufficient informationfrom an interested party to make a determination,

19 U.S.C. § 1677e(a) authorizes Commerce to fill in the factual gaps with “facts otherwise available.” If

Commerce goes a step further and finds that the 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) provides that

Commerce “may use an inference that is adverse to the interests of that party in selecting from the facts

otherwise available.” The statute does not define “the best of its ability” expressly, but the Federal Circuit

has elaborated on what the statute requires of Commerce:

        Before making an adverse inference, Commerce must examine respondent's actions and
        assess the extent of respondent's abilities, efforts, and cooperation in responding to
        Commerce's requests for information.

        2
         The initial weighted-average antidumping duty margin calculated in the Final Determination
was 6.60 percent.
Court No. 03–00442                                                                                   Page 10

        ....

                 To conclude that an importer has not cooperated to the best of its ability and to
        draw an adverse inference under section 1677e(b), Commerce need only make two
        showings. First, it must make an objective showing that a reasonable and responsible
        importer would have known that the requested information was required to be kept and
        maintained under the applicable statutes, rules, and regulations. Second, Commerce must
        then make a subjective showing that the respondent under investigation not only has failed
        to promptly produce the requested information, but further that the failure to fully respond
        is the result of the respondent's lack of cooperation in either: (a) failing to keep and
        maintain all required records, or (b) failing to put forth its maximum efforts to investigate
        and obtain the requested information from its records. An adverse inference may not be
        drawn merely from a failure to respond, but only under circumstances in which it is
        reasonable for Commerce to expect that more forthcoming responses should have been
        made; i.e., under circumstances in which it is reasonable to conclude that less than full
        cooperation has been shown. While intentional conduct, such as deliberate concealment
        or inaccurate reporting, surely evinces a failure to cooperate, the statute does not contain
        an intent element. “Inadequate inquiries” may suffice. The 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 Corp. v. United States, 337 F.3d 1373, 1382–83 (Fed. Cir. 2003) (citation omitted).

        With regard to the first, objective showing, Commerce found that “a reasonable respondent would

have made some effort to document the type of coal utilized in its production of fence posts.” Second

Remand Determ. at 20–21. Commerce supported this finding by noting that coal is among the factors of

production used to produce the subject merchandise, and therefore is something about which Hebei may

be expected to keep accurate records. Id. at 20. As Commerce observes, id., this court has stated that

a “reasonable and responsible producer . . . will have accurate records of its factors of production.” Tianjin

Mach. Imp. & Exp. Corp. v. United States, 353 F. Supp. 2d 1294, 1299 (Ct. Int’l Trade 2004) (quoting

Shandong Huarong Gen. Group Corp. v. United States, Slip Op. 03-135 at 36 (Ct. Int’l Trade Oct. 22,
Court No. 03–00442                                                                                  Page 11

2003)). The court agrees with Commerce.

        Turning to the subjective showing, Commerce concluded that “Hebei failed to cooperate by not

acting to the best of its ability to comply with the Department’s requests for information regarding the type

of coal used in its production of subject merchandise.” Second Remand Determ. at 17. Commerce found

Hebei was unresponsive to “questions concerning the type of coal used in fence post production,” and cited

the following as indications of Hebei’s unresponsiveness:

        Hebei claimed that it telephoned its subcontractor to gather this information, but
        provided no documentation to support its claim. Hebei provided information from web-
        sites describing fence post production in Canada and the United States, but that
        information is not probative of fence post production in the PRC or India that uses coal as
        a heat source for drying. Hebei speculates that a fence post producer using coal would
        purchase the cheapest coal possible, arguing that fence post production requires a low
        UHV, but has provided no supporting documentation to support this presumption. The
        Department notes that it is also possible to presume that producer would purchase high-
        quality, high UHV coal, allowing the producer to use less coal over a longer period than
        it would with the cheap, low UHV coal. In addition, Hebei brought this litigation against
        the Department and claimed that the TERI Data coal prices on the record of this
        proceeding were more representative of the production experience of the PRC producer
        than the import prices the Department had used in the Final Determination. It is not
        unreasonable to expect that having made this claim, Hebei should be able to answer the
        Department’s requests with regard to the grade and/or type of coal used to produce fence
        posts by the respondent, by a Chinese producer, or by an Indian producer.

Id. at 17–18.

        Hebei argues that Commerce “fails to cite any specific instance where Hebei did not act to the best

of its ability,” Hebei Comments on Second Remand at 7, but Hebei does not address the fact that it did

not document or detail its claimed attempts to obtain the requested information from Company X and

Subcontractor Y by telephone.

        Despite litigating this issue vigorously, Hebei now asserts that
Court No. 03–00442                                                                                Page 12

        Commerce is seeking very minor data from an unaffiliated subcontractor three years after
        the fact. As explained repeatedly to Commerce, neither Hebei nor its supplier would have
        a reason to keep records about the type of coal an unaffiliated subcontractor was using to
        dry fence posts because this information was not relevant to their business operations.

Hebei Comments on Second Remand at 9. During the investigation and earlier in this litigation, Hebei was

not so dismissive of the choice of a surrogate coal value. During the investigation, Hebei asserted that

“steam coal” should be valued on the basis of prices “for non-coking steam coal.” Hebei Investigation

First Surrogate Data Submission at 6. In moving for judgment on the agency record, Hebei advocated the

use of steam coal values listed in the 2000/2001 TERI data and asked the court to remand “with

instructions for Commerce to adopt a surrogate value for coal using the domestic Indian prices on record.”

Hebei Mot. for J. on Agency R. at 10. After the First Remand Determination, Hebei asserted that “[t]he

record plainly shows that Hebei does not import its coal.” Hebei Comments on First Remand at 5. In sum,

Hebei has repeatedly indicated that, to some extent, it knew the type of coal it did or did not use, as the

Government argues in its brief. See Def.’s Response to Hebei Comments on Second Remand at 5. If, as

Hebei now asserts, it had no reason to know “whether the subcontractor was using electricity or coal to

dry the coating or what type of coal might have been used,” Hebei Comments on Second Remand at 9,

one wonders how Hebei could have known that its subcontractor used domestically-sourced coal of a type

that would have made it appropriate to use Indian domestic non-coking steam coal prices in computing a

surrogate value.

        The inconsistencies in Hebei’s litigation positions provide a reminder why the Federal Circuit and

this court have recognized that a reasonable and responsible producer will keep accurate records of factors

of production. See Nippon Steel, 337 F.3d at 1382 (“While the standard does not require perfection and
Court No. 03–00442                                                                                    Page 13

recognizes that mistakes sometimes occur, it does not condone inattentiveness, carelessness, or inadequate

record keeping.”); Tianjin Mach. Imp. & Exp. Corp., 353 F. Supp. 2d at 1299; Shandong Huarong, Slip

Op. 03-135 at 36. In Shandong Huarong, this court emphasized that a producer who requests a review

does so under the expectation that it has acted as a reasonable and responsible producer in keeping

records of its factors of production: “There can also be no doubt that a reasonable and responsible

producer, seeking an administrative review, will have accurate records of its factors of production.” Id.,

Slip Op. 03-135 at 36.

        Similarly, Hebei chose to challenge Commerce’s choice of a surrogate coal value and thereby

subjected itself to the expectation that it have records of this factor of production. Until this second remand

proceeding, Hebei had not stated that the coal not was a significant factor of production used to make the

subject fence posts, and it had not admitted that it has no idea of what kind of coal was used to produce

its fence posts.

        Hebei attempts to avoid the application of adverse facts available on the basis that the information

requested was outside of its control. See Hebei Comments on Second Remand at 9–10. Hebei cites

Usinor Sacilor v. United States, 18 CIT 1155, 1162, 872 F. Supp. 1000, 1006–07 (1994), and World

Finer Foods, Inc. v. United States, 24 CIT 541, 543–46 (2000), for what Hebei characterizes as the “well

established” proposition that adverse facts cannot be applied where a producer is unable to obtain

information outside its control. Hebei Comments on Second Remand at 9–10. These case, however, do

not recognize such a broad safe harbor from the imposition of adverse facts.

        First of all, the relevance of Usinor Sacilor is limited by the fact that it reviewed Commerce’s
Court No. 03–00442                                                                                  Page 14

application of the now-repealed best information available (“BIA”) provisions of 19 U.S.C. § 1677e(c)

(1988, repealed 1994). See 18 CIT at 1161, 872 F. Supp. at 1006. The case is distinguishable on other

grounds as well. The respondent in that case had reached an agreement with Commerce to provide limited

reporting of downstream sales. Id., 18 CIT at 1159, 872 F. Supp. at 1005. Although the respondent was

unable “to trace the source of the steel processed by its secondary steel centers,” it “substantially met the

requirements of the original and modified questionnaire requests. [Respondent] supplied more data than

was required under the limited reporting agreement and provided well over 99% of the data demanded by

the original questionnaire.” Id., 18 CIT at 1162, 872 F. Supp. at 1006. The court observed that “the

deficiencies in [respondent’s] data were a result of factors outside [respondent’s] control,” but it was the

circumstances of the case bearing on reasonable conduct—rather than a simple finding that the respondent

did not keep certain records—that made application of severely adverse BIA improper: “[Respondent’s]

subsidiaries did not maintain the sourcing data. Therefore, any tracing would have been done manually.

Due to the time limitations and the large number of invoices involved (180,000), this would have been

unreasonable.” Id., 18 CIT at 1162, 872 F. Supp. at 1007 (citation omitted).

        In contrast, Hebei was not confronted with such an extreme logistical challenge. Indeed, Hebei

asserts that only one subcontractor was involved in using coal to dry the fence posts during the period of

investigation. Moreover, unlike the respondent in Usinor Sacilor who initially informed Commerce that

outside factors prevented it from reporting accurate information on downstream sales, id.,18 CIT at 1159,

872 F. Supp. at 1005, Hebei remained silent about potential limitations on its ability to provide data on

coal—one of its factors of production—until the second remand proceedings. Prior to this point, Hebei
Court No. 03–00442                                                                                     Page 15

argued repeatedly for a domestic Indian steam coal surrogate value, giving the impression that it had some

basis for that position beyond a bare distinction between domestic and import data. See Pls.’ Mot. for J.

on Agency R., at 10; Hebei Comments on First Remand Determ. at 5.

        World Finer Foods also fails to support Hebei’s position. In that case, an Italian respondent had

left the U.S. market and was in a dire financial condition that severely limited its ability to respond to

Commerce’s questionnaire during an administrative review. 24 CIT at 542. Nevertheless, the Italian

respondent offered to supply any limited information Commerce might find helpful. Id. at 544. Commerce

did not respond to the Italian respondent’s offer and applied adverse facts available to it. By failing to offer

any guidance to the Italian respondent, Commerce failed its duty under 19 U.S.C. § 1677m(c)(2) to

consider the respondent’s “ability to respond with some specificity and to modify its requirements, if

necessary.”    24 CIT at 544.          Commerce’s failure to attempt to cooperate with the Italian

respondent—which had little incentive to cooperate as a result of its absence from the market—left the

American importer “to bear the full impact of increased duties.” Id. at 545. Presented with an offer to

cooperate to the best of the Italian respondent’s diminished abilities, it was Commerce’s failure to discharge

its burden under 19 U.S.C. § 1677m(c)(2) that made imposition of adverse facts improper. See id. at 544

(discussing Commerce’s decision not to apply first-tier BIA in a similar situation in Certain Fresh Cut

Flowers from Colombia, 59 Fed. Reg. 15,159, 15,174 (Dep’t Commerce Mar. 31, 1994) (final results)).

World Finer Foods, then, does not support Hebei’s position that adverse facts available are inappropriate

merely because it has not kept records regarding a factor of production used by a subcontractor.

        Here, in contrast, Commerce fulfilled its duty under 19 U.S.C. § 1677m(d), when it provided
Court No. 03–00442                                                                                       Page 16

Hebei with an opportunity to remedy deficiencies in its First Supplemental Response. See Second Supp.

Quest., Def.’s App., Tab 4. Among its many questions seeking some indication of the coal used by Hebei

or in India and the PRC in general, Commerce asked Hebei to explain in detail the steps it took to contact

its subcontractors in order to obtain information about the coal used and to provide all available

correspondence between these parties. Hebei responded merely that it contacted its subcontractors “by

telephone and asked for the requested information. There is no written correspondence related to this

information request.” Third Supp. Response, Def.’s App., Tab 5, at 1. In response to Commerce’s

inquiryas to why it was not necessary for Hebei or its subcontractor to know the coal qualityspecifications,

Hebei stated that “[i]t is both unreasonable and irrational to assume that Hebie [sic] would take an interest

in the grade, type or UHV value of the coal used by its subcontractor in its drying room.” Id., Def.’s App.

Tab 5, at 1. These responses do not constitute the “maximum effort” required by Commerce’s requests

for information. Cf. Shandong Huarong, Slip Op. 03-135 at 36. Having continuously pursued this issue,

Hebei should have been ready to support its claims with solid evidence. Moreover, at this point it is not

clear that Commerce's choice is truly adverse. At most, it is a choice of limited partial adverse available

facts, and no party to the litigation is in a position to say it is not the most accurate information.

        II.      RULE 11 SANCTIONS ARE NOT WARRANTED

                 Hebei argues it has been subjected to harassment and unnecessary delay “in violation of

Rule 11(b)(1) and (2).” Hebei Comments to Remand Determination at 11 (citing Fed. R. Civ. P. 11(b)(1),

(2)). Hebei bases its harassment allegation on Commerce’s use of AFA, which it considers to be meritless

and completely ignorant of the record and existing law. As discussed above, however, Commerce’s use
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of AFA not only has some merit, it is proper under the statute as interpreted by the courts.

                With regard to its allegation of unnecessary delay, Hebei argues that Commerce dragged

out the remand proceedings for almost four months even though Hebei provided the surrogate data it

eventually used—the 2001-2002 TERI data—on April 15, 2005. The court disagrees. Instead of

needlessly prolonging the remand proceedings, Commerce was dutifully following the court’s instructions

by attempting to find information that would support a surrogate coal value, just as it was fulfilling its

statutory duty to allow Hebei the opportunity to remedy a deficient submission. See 19 U.S.C. § 1677m.
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                                               CONCLUSION

               Substantial evidence supports Commerce’s selection of Indian domestic data for the

surrogate coal value and its application of adverse facts available therein. Accordingly, the Commerce’s

Second Remand Determination is sustained. Hebei’s request for Rule 11 sanctions against Government

counsel and/or Commerce is denied.

                                                                 /s/Jane A. Restani
                                                               Jane A. Restani
                                                               Chief Judge

       Dated: This 22nd day of September, 2005.
              New York, New York