Court Opinion

ID: 4175259
Source: CourtListenerOpinion
Date Created: 2017-06-07 17:06:17.463482+00
Date Added: 2024-06-11T07:47:10.764457
License: Public Domain

Slip Op. 17-

                  UNITED STATES COURT OF INTERNATIONAL TRADE

 JINAN FARMLADY TRADING CO., LTD.,

                                     Plaintiff,

 v.
                                                       Before: Richard W. Goldberg, Senior Judge
 UNITED STATES,                                        Court No. 12-00181

                                  Defendant,

 v.

 CHRISTOPHER RANCH, LLC, THE
 GARLIC COMPANY, VALLEY GARLIC,
 VESSEY AND COMPANY, INC., and
 FRESH GARLIC PRODUCERS
 ASSOCIATION,

                       Defendant-Intervenor.

                                    OPINION AND ORDER

[The court finds that the inclusion of the 15-Day Policy in the Final Results lacked the support of
a reasoned explanation. The court sustains the remaining determinations of Commerce.]

                                                             Dated:-XQH

       Robert T. Hume, Hume & Associates LLC, of Taos, New Mexico, argued for Plaintiff.

        Jane C. Dempsey, Commercial Litigation Branch, Civil Division, U.S. Department of
Justice, of Washington, D.C., argued for Defendant. With her on the briefs were Stuart F.
Delery, Principle Deputy Assistant Attorney General, Jeanne E. Davidson, Director, Melissa M.
Devine, Trial Attorney, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the briefs
were George H. Kivork and Michele D. Lynch, Office of Chief Counselor for Import
Administration, U.S. Department of Commerce, of Washington D.C.

     Michael J. Coursey, Kelley Drye & Warren LLP, of Washington, D.C., argued for
Defendant-Intervenors. With him on the briefs was John M. Herrmann.
Court No. 12-00181                                                                              Page 2

      Goldberg, Senior Judge: Plaintiff Jinan Farmlady Trading Co., Ltd. (“Farmlady”)

challenged the final determination of Defendant U.S. Department of Commerce (“Commerce”)

concerning its sixteenth administrative review of the antidumping duty order covering fresh

garlic from the People’s Republic of China. Fresh Garlic from the People’s Republic of China,

77 Fed. Reg. 34,346 (Dep’t Commerce June 11, 2012) (final admin. review) (“Final Results”)

and accompanying Issues and Decision Memorandum (“I&D Mem.”). Farmlady moved for

judgment on the agency record under USCIT Rule 56.2. For the reasons discussed below, the

court sustains the determinations of Commerce with regard to its calculation of surrogate values

and finds unlawful Commerce’s actions in announcing its intention to issue liquidation

instructions 15 days after the publication of the Final Results.

                                         BACKGROUND

       When foreign exporters sell their goods in the United States at less than fair value and to

the detriment of U.S. industry, the U.S. Government imposes duties on those goods. 19 U.S.C.

§ 1673. These “antidumping duties” are calculated by subtracting the foreign product’s “export

price,” or the product’s price in the United States, from its “normal value” (“NV”), or the

product’s price in the exporting country. See id. However, when that exporting country has a

non-market economy (“NME”), the export-country price cannot be used because the law

presumes that government intervention distorts prices in the home market. See Blue Field

(Sichuan) Food Indus. Co. v. United States, 37 CIT __, __, 949 F. Supp. 2d 1311, 1316–17

(2013). Therefore, to calculate NV for goods made in NME countries, Commerce assigns each

of the goods’ direct material inputs an artificial market price or surrogate value. 19 U.S.C.

§ 1677b(c)(1).
Court No. 12-00181                                                                            Page 3

       The underlying antidumping order in this case covers imports of fresh garlic from China.

Fresh Garlic From the People’s Republic of China, 59 Fed. Reg. 59,209 (Dep’t Commerce Nov.

16, 1994) (antidumping duty order). In its sixteenth administrative review of that order,

Commerce selected five separate rate respondents, including Farmlady, in addition to two

mandatory respondents. See Final Results, 77 Fed. Reg. at 34,347-38.

       Commerce selected India as the primary surrogate country for purposes of this review,

and relied on data from that country to calculate the surrogate values for all factors of

production, including chlorine dioxide and packing materials. See Fresh Garlic from the

People’s Republic of China: Preliminary Results of the 2009-2010 Antidumping Duty

Administration Review, 76 Fed. Reg. 76,375 (Dep’t Commerce Dec. 7, 2011) (“Preliminary

Results”). The Indian import data covered the period of review and consisted of the unit values

of inputs that were imported to India from a range of countries.

       For the Preliminary Results, Commerce derived the surrogate values for chlorine dioxide

and packing materials by calculating their average unit value from the Indian import data. See

Surrogate Value Mem. for the Preliminary Results 2, PD 136 (Dec. 5, 2011) (“Prelim. Surrogate

Value Mem.”). But Commerce excluded from these calculations any unit values for imports

from NME countries. Id. In addition, Commerce excluded values of imports to India “from

countries which provide generalized subsidies and “imports that were labeled as originating from

an ‘unidentified’ country,” because, Commerce “could not be certain that [such imports] were

not from either an NME country or a country with general export subsidies.” Id. At the

administrative level, Farmlady raised two objections that it raises again before this court. First,

Farmlady objects to Commerce’s exclusion of NME imports from the Indian surrogate data. See

Mem. in Supp. of Mot. for J. on the Agency R. 31, ECF No. 21 (“Farmlady Br.”). Second,
Court No. 12-00181                                                                             Page 4

Farmlady claims that Commerce was required, but failed, to exclude “aberrational” imports from

the Indian surrogate data. Id. at 36.

        Farmlady also challenges Commerce’s policy of issuing liquidation instructions to

Customs and Border Protection (“CBP”) 15 days after the publication of the final results of an

administrative review (the “15-Day Policy”). Id. at 56.

                      JURISDICTION AND STANDARD OF REVIEW

        This Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) to hear Farmlady’s challenge

to Commerce’s calculation of surrogate values. The court will sustain Commerce’s decisions

unless they are “unsupported by substantial evidence on the record, or otherwise not in

accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). This Court has jurisdiction under 28

U.S.C. § 1581(i) to consider Farmlady’s challenge to Commerce’s policy issuing liquidation

instructions 15 days after the publication of the Final Results. See Shinyei Corp. of Am. v.

United States, 355 F.3d 1297, 1304-05 (Fed. Cir. 2004). In reviewing the 15-Day Policy, this

Court determines whether Commerce’s attendant actions, findings, or conclusions are “arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706; 28

U.S.C. § 2640(e).

                                         DISCUSSION

   I.      The Court Sustains Commerce’s Selection of Data for Surrogate Values.

        As discussed above, in determining the surrogate values for the chlorine dioxide and

packing material inputs, Commerce excluded import data that reflected imports into India from

NME countries. Prelim. Surrogate Value Mem. 2.

        Farmlady argues that Commerce was required to “use all (non-aberrational) imports”

from the Indian import statistics to calculate surrogate values. Farmlady Br. 19 n.52. Farmlady
Court No. 12-00181                                                                         Page 5

therefore challenges Commerce’s calculations of the surrogate values on two grounds. First,

Farmlady contests Commerce’s decision to exclude from the import statistics any data for

imports to India from NME countries. Farmlady Br. 31–36. Second, Farmlady argues that the

import statistics on which Commerce relied contained “aberrational” data that distorted the

surrogate values for chlorine dioxide and the packing materials. Id. at 36–38.

       The Government maintains that Commerce’s exclusion of Indian import data for imports

from NME countries was reasonable because those data were “distorted and are, therefore,

unreliable.” Def. Opp. to Pl.’s Mot. for J. on the Agency R. 6, ECF No. 27 (“Gov. Br.”). In

addition, the Government argues that no record evidence demonstrated that any included data

were “aberrant, unreliable, or unrepresentative.” Id. For the following reasons, the court agrees

and sustains the determinations of Commerce concerning the selection of surrogate value data.

       A. Commerce Did Not Err in Excluding Import Data from NME Countries.

       The relevant statute is silent on the question of how Commerce should derive surrogate

values from import statistics. See 19 U.S.C. § 1677b(c)(1). The statute does not direct

Commerce to either include or exclude import data on imports from NME countries. Rather,

Commerce must select and apply the “best available information regarding the values of such

factors” in an appropriate surrogate market economy country. Id. Because the term “best

available information” is not defined by statute, Commerce has broad discretion to determine

what constitutes such information. See Qingdao Sea-Line Trading Co. v. United States, 766 F.3d

1378, 1386 (Fed. Cir. 2014) (citing QVD Food Co. v. United States, 658 F.3d 1318, 1323 (Fed.

Cir. 2011)).

       Here, Commerce was justified in disregarding any import data concerning imports into

India from NME countries. Commerce provided a reasoned explanation for its decision, namely,
Court No. 12-00181                                                                           Page 6

that excluding data on imports to India from NME countries followed its “longstanding

determination that NME prices are unreliable.” I&D Mem. 37. Commerce relied on Indian

import data as a means to reducing the distortion presented by China’s NME. It follows that it

was reasonable for Commerce to infer that any surrogate import data from NME countries are

likewise unreliable. This court has previously held that, while a “blanket policy” against ever

using NME data cannot be sustained, “it is reasonable for Commerce to infer that data on

imports from an NME country are inferior to import data for goods from a market economy

country.” Jinan Yipin Corp. v. United States, 33 CIT 934, 950, 637 F. Supp. 2d 1183, 1195-96

(2009). Ultimately, Commerce’s decision to exclude the data was logically consistent with the

antidumping statute’s general requirement that the agency derive values of NME inputs using the

“best available information regarding the values of such factors in a market economy country.”

See 19 U.S.C. § 1677b(c)(1)&(4). Thus, Commerce reasonably disregarded Indian import

statistics for imports from NME countries.

       Farmlady contends that Commerce’s decision to exclude NME import data yielded

“grossly distorted” surrogate values. Farmlady Br. 33–34; see also Farmlady Case Brief 4, PD

186 (Apr. 20, 2011) (“[T]he Department cannot exclude NME imports since such exclusions

distort the ‘in’ country price equivalent.”). Even if true – and Farmlady has not demonstrated

that it is – this contention, by itself, is immaterial. Commerce’s mandate is to determine

antidumping margins as accurately as possible. See Shakeproof Assembly Components, Div. of

Illinois Tool Works, Inc. v. United States, 268 F.3d 1376, 1382 (Fed. Cir. 2001) (citing another

source). The court in Shakeproof held that, because “[t]he process of constructing foreign

market value for a producer in a non-market economy country is difficult and necessarily

imprecise,” Commerce is authorized to augment its use of surrogate values in order to select the
Court No. 12-00181                                                                           Page 7

“best available information.” Id. at 1381–82. Farmlady demonstrates only that some values for

imports into India from NME countries differ from the average Indian import values. In fact, as

Farmlady admits, excluded NME import values were higher than the average value for some

inputs and lower than the average value for other inputs. See Farmlady Case Brief 12.

Consequently, the impact of Commerce’s methodology on the ultimate antidumping margins, if

any, is not readily apparent. Farmlady does not establish that Commerce’s decision to exclude

NME import data is inconsistent with its obligation to use the best information available.

Specifically, Farmlady does not establish how, if at all, the exclusion of NME import data

resulted in distorted antidumping margins.

       In sum, Commerce’s decision to disregard the import data for inputs that were imported

to India from NME countries was consistent with the antidumping statute and Farmlady has not

cited any evidence to require Commerce to do otherwise. Commerce’s reasoned methodology

produced antidumping margins supported by substantial evidence and must be sustained.

       B. Commerce Did Not Improperly Include Aberrational Data.

       Farmlady also contends that Commerce’s calculation of surrogate values for chlorine

dioxide and packing materials was distorted by “aberrational” import data. Farmlady Br. 36.

However, contrary to Farmlady’s assertions, Commerce reasonably determined that its surrogate

value calculations did not contain aberrational data.

       As an initial matter, Farmlady claims that Commerce failed to evaluate whether the

import statistics on which the agency relied contained aberrational data. See Farmlady Br. 36.

But Commerce specifically acknowledged Farmlady’s claim and found that there was “no

evidence on the record of the instant case that demonstrates that any of the Indian import
Court No. 12-00181                                                                          Page 8

statistics used as surrogate values . . . were aberrant, unreliable, or unrepresentative.” I&D Mem.

38 & n.175. The court agrees.

       Farmlady cites two areas of the record in support of its claim that the chosen import

statistics contained aberrational data. First, Farmlady focuses on the data for Indian imports of

packaging tape from Nepal, asserting broadly that this data was “aberrational and low” because it

reflects a value that is lower than the average value. Farmlady Br. 36. But merely showing that

a price is low is not enough. See, e.g., Ad Hoc Shrimp Trade Action Comm. v. United States, 38

CIT __, __, 986 F. Supp. 2d 1362, 1370-71 (2014) (finding that labor data from a surrogate

country was not “aberrational” just because values were lower than those of data from other

potential surrogate countries). Indeed, because an average is necessarily calculated from higher

and lower values within a range of numbers, it cannot be the case that a value is aberrant simply

because it is lower than the average.

       Second, Farmlady contrasts values of Indian imports of chlorine dioxide from Canada,

which were $175.50 per kilogram, with the average unit value for all Indian imports of chlorine

dioxide, which Farmlady cites as $1.81 per kilogram. Pl. Reply in Supp. of Mot. for J. on the

Agency R. 11, ECF No. 30. But Farmlady again fails to establish that the value for Indian

imports of chlorine dioxide from Canada was “aberrational.” Simply showing that a price is high

is not enough. See Jacobi Carbons AB, 38 CIT __, __, 992 F. Supp. 2d 1360, 1375-76 (2014).

       Farmlady only asserted that low and high import prices were aberrational. But Farmlady

failed to provide evidence to show that any subsequent surrogate values were distorted. It is the

parties to a proceeding that bear the burden of building an adequate record. QVD Food Co. v.

United States, 658 F.3d 1318, 1324 (Fed. Cir. 2011). Farmlady does not contend that it was

unable to supplement the record with any information that might have shown how “aberrational”
Court No. 12-00181                                                                              Page 9

values in the import statistics distorted certain surrogate values. In turn, Farmlady has not

demonstrated how any allegedly distorted surrogate values resulted in inaccurate NV or

antidumping margins.

         Thus, Commerce’s determination that there were no aberrational data in the import

statistics used to calculate the surrogate values for chlorine dioxide and packing materials was

reasonable.

   II.      Commerce’s Inclusion in the Final Results of its Intention to Issue Liquidation
            Instructions 15 Days After the Publication of the Final Results was Unlawful.

         Farmlady also challenges Commerce’s statement in the Final Results that “[t]he

Department intends to issue appropriate assessment instructions . . . to CBP 15 days after the

date of publication of this notice in the Federal Register.” Final Results, 77 Fed. Reg. at 34,348.

The parties agree that the inclusion of this language is an established policy of Commerce.

         Farmlady argues that the 15-Day Policy unlawfully conflicts with the 30-day period

interested parties have to commence a civil action under 19 U.S.C. § 1516a(a)(2)(A). Farmlady

Br. 56. In response, the Government argues that Farmlady lacks standing to bring this claims

and that, in any event, the 15-Day Policy is reasonable and lawful. For the reasons discussed

below, the court finds that the 15-Day Policy, in light of the statutory time period for filing an

action under 19 U.S.C. § 1516a(a)(2)(A), is unlawful in that it lacks the support of a reasoned

explanation.

         Under USCIT Rule 3(a) and 19 U.S.C. § 1516a(a)(2)(A), an interested party must file any

challenge to the final results of an administrative review within 30 days of the publication of the

final results. Once an interested party files both a summons and complaint, it can seek a

preliminary injunction against liquidation of its entries pending the resolution of its action. See

USCIT R. 56.2(a). The inclusion of the 15-Day Policy language in the final results puts an
Court No. 12-00181                                                                                Page 10

interested party on notice that it will likely have to file its summons, complaint, and preliminary

injunction motion within 15, rather than 30, days from the publication of the final results in order

to avoid liquidation of its entries. Farmlady argues that the 15-Day Policy therefore unlawfully

truncates the statutory period for preparing and filing a challenge to the final results of an

administrative review. See Farmlady Br. 58. 1

        The Government makes a number of related arguments concerning the justiciability of

Farmlady’s claim. See, e.g., Def. Resp. to Ct. Req. for Supp. Briefing 4, ECF No. 46 (“Gov.

Supp. Br.”) (arguing that “Farmlady raises only hypothetical harm”). However, as this Court has

previously found, the 15-Day Policy “causes recurring injury in fact by repeatedly forcing

plaintiffs to file the summons, complaint, and motion for a preliminary injunction within fifteen

days of publication of the Final Results.” SKF USA Inc. v. United States, Slip Op. 11-94, 2011

WL 3320637, at *4 (CIT Aug. 2, 2011). Furthermore, this Court has reasoned that the 15-Day

Policy is an agency action capable of repetition yet evading review. SKF USA Inc. v. United

States, 33 CIT 1602, 1614, 659 F. Supp. 2d 1338, 1348-49 (2009), aff’d in part and vacated in

part upon other grounds, 630 F.3d 1365 (Fed. Cir. 2011). Therefore, the issue is reviewable

under an exception to the mootness doctrine. See Torrington Co. v. United States, 44 F.3d 1572,

1577 (Fed. Cir. 1995). The court is persuaded by the analyses of its previous rulings, see, e.g.,

1
         This Court has previously addressed the interaction of Commerce’s 15-Day Policy and the 30-day
period for filing a civil action. The court acknowledges that there are divergent decisions on this topic,
some of which support the position of the Government and some of which support the position of
Farmlady. See, e.g., SKF USA Inc. v. United States, 33 CIT 1866, 1890, 675 F. Supp. 2d 1264, 1286
(2009) and Tianjin Mach. Imp. & Exp. Corp. v. United States, 28 CIT 1635, 1649, 353 F. Supp. 2d 1294,
1309 (2004), aff'd, 146 F. App'x 493 (Fed. Cir. 2005). But see Mittal Steel Galati S.A. v. United States,
31 CIT 1121, 1145, 502 F. Supp. 2d 1295, 1316 (2007). None of these decisions are binding here.
However, the court is persuaded by the reasoning of those decisions which held that Commerce failed to
reconcile the 15-Day Policy with the time allotted for interested parties to file an action challenging the
final results of an administrative review under 19 U.S.C. § 1516a(a)(2)(A).
Court No. 12-00181                                                                          Page 11

SKF USA, 2011 WL 3320637, at *4, and finds that Farmlady’s challenge alleges an injury in fact

and is justiciable.

        With regard to the merits of Farmlady’s challenge, the Government correctly points out

that “the statute is silent as to when Commerce is to issue liquidation instructions.” Gov. Br. 21.

Accordingly, this matter is entrusted to Commerce and this Court reviews this agency action

with great deference. See Camargo Correa Metais, S.A. v. United States, 200 F.3d 771, 773

(Fed. Cir. 1999). But even under this deferential standard, Commerce’s actions must be

reasonable and “based on a consideration of the relevant factors.” Citizens to Pres. Overton

Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971).

        The Government argues that it has “reasonably filled that statutory gap” because

unliquidated entries are deemed liquidated six months after the final results of an administrative

review, per 19 U.S.C. § 1504(d). Gov. Br. 21. Thus, the Government reasons, the 15-Day

Policy sensibly achieves the goal of ensuring that CBP has enough time to avoid deemed

liquidations. But Commerce’s justification for the 15-Day Policy evidences no attempt to

consider any relevant factors competing with CBP’s interests, namely, the interests of parties

seeking to investigate, prepare, and file thorough challenges to the final results of an

administrative review. On the administrative record of these proceedings, Commerce makes no

mention of how the inclusion of the 15-Day Policy language is compatible with the time period

allotted to Farmlady under § 1516a or with the practical realities that time period reflects. As a

result, the court cannot say that Commerce has reasonably filled the statutory gap. In light of the

period of time allotted for filing an action under § 1516a, Commerce’s inclusion of the 15-Day
Court No. 12-00181                                                                          Page 12

Policy in the Final Results was arbitrary, capricious, and unlawful. See 28 U.S.C. § 2640(e); 5

U.S.C. § 706(2)(A).

                                         CONCLUSION

        The court finds that the inclusion of the 15-Day Policy in the Final Results lacked the

support of a reasoned explanation. The court sustains Commerce on all other issues.

        Accordingly, it is hereby,

        ORDERED that Plaintiff’s Motion for Judgment on the Agency Record Under USCIT

Rule 56.2 is DENIED in part and GRANTED in part; it is further

        ORDERED that the determinations of Commerce concerning the calculation of surrogate

values are sustained; it is further

        ORDERED that Commerce’s inclusion, in the Final Results, of its intention to issue

liquidation instructions 15 days after the publication of the Final Results lacked the support of a

reasoned explanation and was therefore unlawful.

                                                                           /s/ Richard W. Goldberg
                                                                            Richard W. Goldberg
                                                                                 Senior Judge
Dated:-XQH
New York, New York