Yc Rubber Co. (north America) LLC, Sutong Tire Resources, Inc., Mayrun Tyre (hong… v. United States

United States Court of Appeals
for the Federal Circuit
______________________
YC RUBBER CO. (NORTH AMERICA) LLC,
SUTONG TIRE RESOURCES, INC., MAYRUN TYRE
(HONG KONG) LIMITED, ITG VOMA
CORPORATION, KENDA RUBBER (CHINA) CO.,
LTD.,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant-Appellee
______________________
2021-1489, 2021-1698, 2021-1699, 2021-1700
______________________
Appeals from the United States Court of International
Trade in No. 1:19-cv-00069-MAB, Judge Mark A. Barnett.
______________________
Decided: August 29, 2022
______________________
N ICHOLAS SPARKS , Hogan Lovells US LLP, Washing-
ton, DC, argued for plaintiffs-appellants ITG Voma Corpo-
ration, Mayrun Tyre (Hong Kong) Limited, Sutong Tire
Resources, Inc., YC Rubber Co. (North America) LLC.
Plaintiff-appellant ITG Voma Corporation also repre-
sented by CRAIG A. L EWIS , J ONATHAN T HOMAS STOEL .
N ED H. MARSHAK, Grunfeld, Desiderio, Lebowitz, Sil-
verman & Klestadt LLP, New York, NY, for plaintiffs-
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YC RUBBER CO. ( NORTH AMERICA) v. US 2
appellants YC Rubber Co. (North America) LLC, Sutong
Tire Resources, Inc. Also represented by ALAN L EBOWITZ,
MAX F. SCHUTZMAN; JORDAN CHARLES K AHN, Washington,
DC.
J OHN MICHAEL P ETERSON, Neville Peterson LLP, New
York, NY, for plaintiff-appellant Mayrun Tyre (Hong Kong)
Limited. Also represented by P ATRICK K LEIN, RICHARD F.
O'N EILL , Seattle, WA.
L IZBETH ROBIN L EVINSON, Fox Rothschild LLP, Wash-
ington, DC, for plaintiff-appellant Kenda Rubber (China)
Co., Ltd. Also represented by BRITTNEY RENEE P OWELL ,
RONALD MARK W ISLA.
ASHLEY AKERS , Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washing-
ton, DC, argued for defendant-appellee. Also represented
by BRIAN M. BOYNTON, J EANNE D AVIDSON, P ATRICIA M.
MCCARTHY ; AYAT MUJAIS , Office of the Chief Counsel for
Trade Enforcement & Compliance, United States Depart-
ment of Commerce, Washington, DC.
______________________
Before N EWMAN, SCHALL , and P ROST , Circuit Judges.
N EWMAN, Circuit Judge.
This appeal is from the second administrative review
of antidumping duties for certain passenger-vehicle and
light-truck tires from the People’s Republic of China. Un-
der review, there were forty-two exporters and producers
of the subject products. The Department of Commerce ini-
tially selected two respondents as representative; one of
these two then withdrew from the review, and Commerce
reviewed the remaining respondent and applied the result-
ant antidumping duty rate to all exporters and producers
subject to review. Commerce denied all requests to
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YC RUBBER CO. ( NORTH AMERICA) v. US 3
withdraw from the review after publishing its Preliminary
Results.
On appeal by several exporters and producers (collec-
tively, “YC Rubber”), the Court of International Trade
(“CIT”) affirmed. This appeal followed.
BACKGROUND
This second administrative review was initiated on Oc-
tober 16, 2017. Initiation of Antidumping and Countervail-
ing Duty Administrative Reviews, 82 Fed. Reg. 48,051,
48,055 (Oct. 16, 2017). Pursuant to 19 U.S.C. § 1677(c)(1),
Commerce is generally required to examine all known ex-
porters/producers of the subject products and determine an
individual weighted-average dumping margin for each ex-
porter and producer. As is routine, Commerce allowed in-
dividual exporters/producers to apply for separate rate
status. Such respondents receive an individually calcu-
lated dumping margin separate from the country-wide
margin.
§ 1677(c) Determination of dumping margin
(1) General rule
In determining weighted average dumping
margins under section 1673b(d), 1673d(c), or
1675(a) of this title, the administering authority
shall determine the individual weighted average
dumping margin for each known exporter and pro-
ducer of the subject merchandise.
During the second review, forty-two exporters and produc-
ers applied for and were initially granted separate rate sta-
tus. Due to the high number of separate rate respondents,
Commerce determined that it would not be feasible to re-
view each of them individually. U.S. Dep’t of Commerce
Respondent Selection Mem. (Apr. 12, 2018), Appx223–231.
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YC RUBBER CO. ( NORTH AMERICA) v. US 4
Thus, Commerce invoked § 1677(c)(2), which provides the
following exception:
(c)(2) Exception
If it is not practicable to make individual
weighted average dumping margin determinations
under paragraph (1) because of the large number of
exporters or producers involved in the investiga-
tion or review, the administering authority may de-
termine the weighted average dumping margins
for a reasonable number of exporters or producers
by limiting its examination to—
(A) a sample of exporters, producers, or types of
products that is statistically valid based on the in-
formation available to the administering authority
at the time of selection, or
(B) exporters and producers accounting for the
largest volume of the subject merchandise from the
exporting country that can be reasonably exam-
ined.
Several exporters requested that Commerce select
three mandatory respondents for its sample. However,
Commerce selected only two mandatory respondents:
Zhaoqing Junhong Co., Ltd. (“Junhong”) and Shandong
Haohua Tire Co., Ltd. (“Haohua”). Selection Mem., at 7.
Commerce explained that it selected these two because
they were “the top two publicly identifiable exporters/pro-
ducers of passenger vehicle and light truck tires sold to the
United States.” Id.
On April 12, 2018, Commerce issued its initial ques-
tionnaires to Junhong and Haohua. Two weeks later, Hao-
hua gave notice of its withdrawal from participation in the
review. Letter from DeKieffer & Horgan, PLLC to the Hon-
orable Wilbur L. Ross, Jr., Sec’y of Commerce, (Apr. 26,
2018); Appx408–411. Commerce did not select a
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YC RUBBER CO. ( NORTH AMERICA) v. US 5
replacement respondent, and over the next three months
Commerce investigated only Junhong.
On September 11, 2018, Commerce issued its Prelimi-
nary Results based on the examination of Junhong and ap-
plied an individual dumping margin of 73.63%. This
margin was then designated as the rate for all of the ex-
porters and producers.
Several separate rate respondents contested Com-
merce’s decision to apply the 73.63% margin to all other
entities because this margin was based on examination of
only one respondent. Several respondents also took issue
with how Junhong’s individual rate was calculated. In par-
ticular, they disagreed with Commerce valuing Junhong’s
factors of production by selecting Thailand as the primary
surrogate country and disregarding Thai import values
from India, Indonesia, and South Korea. Commerce ex-
plained that the Thai import values were disregarded be-
cause they came from countries providing non-industry-
specific export subsidies.
Several respondents then sought to withdraw their re-
view requests. Commerce denied these requests as un-
timely, for they were submitted after the 90-day period
established by 19 C.F.R. § 351.213(d)(1).
On April 22, 2019, Commerce issued the Final Results
for the second review and addressed various concerns that
had been raised. Commerce continued to use a single man-
datory respondent, Junhong, for its investigation but re-
duced the weighted-average dumping margin to 64.57%.
Commerce applied this rate to all participants in the re-
view. Certain Passenger Vehicle and Light Truck Tires
from the People’s Republic of China: Final Results of Anti-
dumping Duty Administrative Review 2016-2017, 84 Fed.
Reg.17,782–83 (Apr. 26, 2019). Commerce stated that sec-
tion 1677(c)(2) does not require it to base the rate on exam-
ination of more than one exporter or producer. Commerce
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YC RUBBER CO. ( NORTH AMERICA) v. US 6
stated that after Haohua’s withdrawal, “no exporter/pro-
ducer subject to the review requested individual examina-
tion, requested treatment as a voluntary respondent,
submitted voluntary questionnaire responses, or submit-
ted a request for Commerce to select an additional respond-
ent.” Certain Passenger Vehicle and Light Truck Tires from
the People’s Republic of China: Issues and Decision Memo-
randum for the Final Results of the 2016-2017 Antidump-
ing Duty Administrative Review: 2016-2017, (Dep’t of
Commerce Apr. 19, 2019).
YC Rubber, Sutong Tire, and ITG Voma, along with
Mayrun Tyre (Hong Kong) Ltd. and Kenda Rubber (China)
Co., Ltd., sought review of the Final Results by the CIT
pursuant to 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C.
§ 1581(c). The CIT held that Commerce’s use of a sole man-
datory respondent was a reasonable exercise of agency dis-
cretion. The court also determined that Commerce’s
interpretation of § 1677f-1(c)(2)(B) was permissible, and
the court deferred to Commerce’s reading of the statute.
The CIT sustained Commerce’s decision to exclude
Thai import data from India, Indonesia, and South Korea
when determining surrogate values for Junhong. The
court held that Commerce’s determination was supported
by substantial evidence because Commerce had deter-
mined that broadly available export subsidies existed as
determined in prior administrative reviews. Y.C. Rubber
Co., LLC v. United States, 487 F. Supp. 3d 1367, 1386 (Ct.
Int’l Tr. 2020).
After the CIT affirmed Commerce’s Final Results, YC
Rubber, Sutong Tire, and ITG Voma filed the present ap-
peal on the grounds that 1) Commerce impermissibly inter-
preted § 1677(c)(2) and based the separate rate dumping
margin on the examination of a single respondent; 2) Com-
merce’s application of Junhong’s rate to other separate rate
respondents is unsupported by substantial evidence and
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YC RUBBER CO. ( NORTH AMERICA) v. US 7
unlawful; 3) Commerce’s decision to deny the withdrawal
requests is unsupported by substantial evidence; and
4) Commerce’s decision to exclude Thai import data from
India, Indonesia, and South Korea when determining Jun-
hong’s factors-of-production value is unsupported by sub-
stantial evidence. Appellant Mayrun Tyre joins the appeal
on grounds 1) and 3).
D ISCUSSION
The Federal Circuit reviews tariff decisions of the CIT
de novo; thus, we apply the same standard used by the CIT
to review the Commerce decision. Downhole Pipe &
Equip., L.P. v. United States, 776 F.3d 1369, 1373 (Fed. Cir.
2015). Pursuant to 19 U.S.C. § 1516a(b)(1)(B)(i), “[our]
court shall hold unlawful any determination, finding, or
conclusion found . . . to be unsupported by substantial evi-
dence on the record or otherwise not in accordance with
law.” Substantial evidence is “‘more than a mere scintilla,
as well as evidence that a reasonable mind might accept as
adequate to support a conclusion,’ and Commerce’s ‘finding
may still be supported by substantial evidence even if two
inconsistent conclusions can be drawn from the evidence.’”
SolarWorld Americas, Inc. v. United States, 910 F.3d 1216,
1222 (Fed. Cir. 2018) (quoting Downhole Pipe & Equip.,
L.P., 776 F.3d at 1374). To implement this standard, Com-
merce must provide a “rational connection between the
facts found and the choice made.” Burlington Truck Lines,
Inc. v. United States, 371 U.S. 156, 168 (1962).
I
The statute requires a reasonable foundation for the
average dumping margin calculated for multiple import-
ers. If a large number of exporters and producers are under
review, Commerce may “determine the weighted average
dumping margins for a reasonable number of exporters or
producers by limiting examination to— a sample of export-
ers, producers or types of products that is statistically
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valid . . . or [to] exporters and producers accounting for the
largest volume of the subject merchandise.” 19 U.S.C.
§ 1677(c)(2)(B).
The government states that nothing in § 1677f-
1(c)(2)(B) compels Commerce to individually review more
than one respondent, and that Commerce’s position that it
suffices to review only one respondent warrants Chevron
deference. See Chevron U.S.A., Inc. v. Nat. Res. Def. Coun-
cil, 467 U.S. 837 (1984). When reviewing an agency’s in-
terpretation of a statute under Chevron, we first determine
“whether Congress has directly spoken to the precise ques-
tion at issue,” and if so, the court must follow Congress’s
intent. Id. at 842. When the statute is silent or ambiguous,
the court must determine whether the agency’s interpreta-
tion is reasonable. Id. at 842–45.
We conclude that Commerce’s interpretation is con-
trary to the statute’s unambiguous language. The statute
calls for all respondents to be individually investigated, un-
less the large number makes separate review impractica-
ble. This statutory “exception” authorizes review of a
smaller number of exporters or producers than have re-
quested review. 19 U.S.C. § 1677f-1(c)(2). The question is
whether the statute permits Commerce to review a single
exporter or producer when multiple have requested review
and Commerce has not demonstrated that it was otherwise
reasonable to calculate the all-others rate based on only
one respondent.
The criterion for a reasonable number is set forth in §
1677(c), as whether the sample rate is “statistically valid.”
The statute generally requires that the “reasonable num-
ber” is greater than one. It provides:
19 U.S.C. § 1673d(c)(5) Method for determining es-
timated all-others rate
(A) General rule
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For purposes of this subsection and section
1673b(d) of this title, the estimated all-others rate
shall be an amount equal to the weighted average
of the estimated weighted average dumping mar-
gins established for exporters and producers indi-
vidually investigated, excluding any zero and de
minimis margins, and any margins determined en-
tirely under section 1677e of this title.
(B) Exception
If the estimated weighted average dumping
margins established for all exporters and produc-
ers individually investigated are zero or de mini-
mis margins, or are determined entirely under
section 1677e of this title, the administering au-
thority may use any reasonable method to estab-
lish the estimated all-others rate for exporters and
producers not individually investigated, including
averaging the estimated weighted average dump-
ing margins determined for the exporters and pro-
ducers individually investigated.
In addition, 19 U.S.C. § 1677f-1(c)(2) specifies that Com-
merce “may determine the weighted average dumping mar-
gins for a reasonable number of exporters or producers.”
Congress contemplated the possibility of multiple export-
ers and producers, and that antidumping duties could be
determined for a reasonable number of exporters and pro-
ducers that was less than the total number. To be sure,
Commerce correctly notes that “unless the context indi-
cates otherwise . . . words importing the plural include the
singular.” Appellee’s Br. 15 (citing 1 U.S.C. § 1). But here,
Commerce must “determine the weighted average” for that
reasonable number, and Commerce provides no reason why
it would be reasonable to “average” a single rate. We con-
clude that a “reasonable number” is generally more than
one.
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Notably, the CIT has reached the same conclusion we
arrive at today. In Shaeffler Italia S.R.L. v. United States,
the court explained:
In using the terms “reasonable number of exporters
or producers” and “large number of exporters or
producers” in section 777A(c)(2) of the Tariff Act,
Congress has directly spoken to the precise ques-
tion at issue. The plural term “reasonable number
of exporters or producers,” read according to its
plain meaning, does not encompass a quantity of
one. 19 U.S.C. § 1677f-1(c)(2) (emphasis added).
781 F. Supp. 2d 1358, 1362–3 (Ct. Int’l Tr. 2011) (hold-
ing that “a reasonable number of exporters or producers
must be greater than one”); see also, e.g., Mid Continent
Nail Corp. v. United States, 949 F. Supp. 2d 1247, 1269
n.18 (Ct. Int’l Tr. 2013) (referring to “the incontrovertible
observation that ‘[t]he plural term “reasonable number of
exporters or producers,” read according to its plain mean-
ing, does not encompass a quantity of one’” (emphases in
original)).
For these reasons, we conclude that Commerce erred in
relying on a single entity for calculation of a dumping mar-
gin for all respondents.
II
Having determined that Commerce unlawfully re-
stricted its examination to a single mandatory respondent,
substantial evidence does not support Commerce’s applica-
tion of Junhong’s rate to the other separate rate respond-
ents.
Appellants also ask us to decide whether Commerce’s
decision to exclude Thai import data from India, Indonesia,
and South Korea when determining Junhong’s factors of
production value is correct. Such a decision is premature,
for these fact-dependent situations may vary with the spe-
cific circumstances under review. We also do not reach
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Appellants’ challenge to Commerce’s decision to deny Ap-
pellants’ withdrawal requests.
CONCLUSION
We conclude that Commerce erred in restricting its ex-
amination to only one exporter/producer. We vacate the
decision of the Court of International Trade, and remand
for further proceedings in conformity with this opinion.
VACATED AND REMANDED
COSTS
No costs.
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