Changzhou Hawd Flooring Co., Ltd. et al v. United States

Slip Op. 18–82
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Leo M. Gordon, Judge
Court No. 12-00020
OPINION and ORDER
[Sustaining in part Commerce’s Fifth Remand Results; entering judgment ordering
exclusion for certain respondents.]
Dated: July 3, 2018
Gregory S. Menegaz and Alexandra H. Salzman, deKieffer & Horgan, PLLC, of
Washington, DC, argued for the Plaintiffs Changzhou Hawd Flooring Co., Ltd., Dunhua
City Jisen Wood Industry Co., Ltd., Dunhua City Dexin Wood Industry Co., Ltd., Dalian
Huilong Wooden Products Co., Ltd., Kunshan Yingyi-Nature Wood Industry Co., Ltd, and
Karly Wood Product Limited. With them on the brief was J. Kevin Horgan.
Jill A. Cramer, Mowry & Grimson, PLLC, of Washington, DC, argued for Plaintiff-
Intervenor Fine Furniture (Shanghai) Limited. With her on the brief were Kristin H. Mowry,
Jeffrey S. Grimson, Sarah A. Wyss, Yuzhe PengLing, and James Beaty.
Craig A. Lewis, Hogan Lovells US LLP, of Washington, DC, argued for Plaintiff-
Intervenor Armstrong Wood Products (Kunshan) Co., Ltd. With him on the brief was
H. Deen Kaplan.
CHANGZHOU 	HAWD 	FLOORING 	CO.,
LTD., 	DUNHUA 	CITY 	JISEN 	WOOD
INDUSTRY 	CO., 	LTD., 	DUNHUA 	CITY
DEXIN 	WOOD 	INDUSTRY 	CO., 	LTD.,
DALIAN HUILONG WOODEN PRODUCTS
CO., 	LTD., 	KUNSHAN 	YINGYI-NATURE
WOOD 	INDUSTRY 	CO., 	LTD., 	KARLY
WOOD PRODUCT LIMITED,
Plaintiffs,
v.
UNITED STATES,
Defendant.
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Mark 	Ludwikowski 	Clark 	Hill 	PLC, 	of 	Washington, 	DC, 	argued 	for 	Plaintiff-
Intervenor Lumber Liquidators Services, LLC. With him on the brief were R. Kevin Williams
and Lara A. Austrins.
Claudia Burke, Assistant Director, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, argued for Defendant United States. With
her on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Tara K. Hogan, Assistant Director. Of counsel was Shelby M.
Anderson, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance,
U.S. Department of Commerce, of Washington, DC.
Jeffrey S. Levin, Levin Trade Law, P.C., of Bethesda, MD, argued for Defendant-
Intervenor Coalition for American Hardwood Parity.
Gordon, Judge: This action involves the final less than fair value determination of
the U.S. Department of Commerce (“Commerce”) in the antidumping duty investigation
covering multilayered wood flooring from the People's Republic of China (“PRC”) for the
period of April 1, 2010 through September 30, 2010. See Multilayered Wood Flooring
from the People’s Republic of China, 76 Fed. Reg. 64,318 (Dep’t of Commerce Oct. 18,
2011) (final determ.) (“Final Determination”), and accompanying Issues & Decision
Memorandum, 	A-570-970 	(Oct. 	11, 	2011), 	available 	at
http://enforcement.trade.gov/frn/summary/prc/2011-26932-1.pdf 	(“Decision
Memorandum”) (last visited this date); see also Multilayered Wood Flooring from the
People’s Republic of China, 76 Fed. Reg. 76,690 (Dep’t of Commerce Dec. 8, 2011)
(amended final determ. and antidumping duty order) (“Order”).
This action returns to the U.S. Court of International Trade from Commerce
following a remand redetermination ordered by the U.S. Court of Appeals for the Federal
Circuit directing Commerce to revise its determination of the “separate rate” and apply
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the “expected method” under 19 U.S.C. § 1673d(c)(5)(B), or to justify any departure from
the “expected method.” Changzhou Hawd Flooring Co. v. United States, 848 F.3d 1006,
1008 (Fed. Cir. 2017) (“Changzhou Hawd VI”). Commerce “was unable to make the
findings necessary to justify departure from the expected method,” Final Results of
Redetermination at 32 (July 21, 2017) (“Fifth Remand Results”), and thus applied the
“expected method” for the separate rate, averaging the calculated rates of mandatory
respondents, which was zero. The issue before the court is whether Commerce was then
obligated also to exclude the separate rate respondents from the Order as it did with the
mandatory respondents. Familiarity with the history of this action is presumed. See Fifth
Remand Results at 2–6 (explaining history of case).
Separate rate respondents Changzhou Hawd Flooring Co., Ltd., Dalian Huilong
Wooden Products Co., Ltd., Dunhua City Jisen Wood Industry Co., Ltd., Dunhua City
Dexin Wood Industry Co., Ltd., Kunshan Yingyi-Nature Wood Industry Co., Ltd, and Karly
Wood Product Limited (together, “Changzhou Hawd”); Fine Furniture (Shanghai) Limited
(“Fine Furniture”); Armstrong Wood Products (Kunshan) Co., Ltd. (“Armstrong”) challenge
the 	Fifth 	Remand 	Results. 	See 	Pl.-Intervenor 	Armstrong’s 	Comments 	Regarding
Commerce’s Final Results of Redetermination Pursuant to Court Remand, ECF No. 170
(“Armstrong Cmts.”); Comments of Certain Separate Rate Appellants Opp. Fifth Remand
Redetermination, 	ECF 	No. 	171 	(“Changzhou 	Hawd 	Cmts.”); 	Pl.-Intervenor 	Fine
Furniture’s Comments on Commerce’s Final Results of Redetermination Pursuant to
Court 	Remand, 	ECF 	No. 	172 	(“Fine 	Furniture 	Cmts.”); 	see 	also 	Def.’s 	Reply 	to
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Pls.’ Comments on Remand Redetermination, ECF No. 176 (“Def.’s Reply”); Reply
Comments of Def.-Intervenor Regarding Commerce’s Final Results of Redetermination
Pursuant to Court Order, ECF No. 175 (“Def.-Intervenor Reply”). Plaintiff-Intervenor
Lumber Liquidators also challenges Commerce’s refusal to exclude the separate rate
respondents, but also argues that Commerce should have terminated the Order ab initio.
See 	Pl.-Intervenor 	Lumber 	Liquidators 	Services, 	LLC’s 	Comments 	on 	Remand
Redetermination, ECF No. 173 (“Lumber Liquidators Cmts.”).
For 	the 	reasons 	set 	forth 	below, 	the 	court 	sustains 	Commerce’s 	decision
(1) denying Lumber Liquidators’ request to terminate the Order ab initio, and (2) denying
exclusion from the Order for the separate rate respondents that did not request voluntary
examination. 	For 	the 	three 	separate 	rate 	respondents 	that 	requested 	voluntary
examination during the investigation (Fine Furniture, Armstrong, and Dunhua City Jisen
Wood Industry Co., Ltd., collectively, “Voluntary Applicants”), the court determines that
Commerce arbitrarily applied its exclusion regulation, 19 C.F.R. § 351.204(e)(1), and
enters judgment ordering Commerce to exclude them from the Order.
I. Standard of Review
The court sustains Commerce’s “determinations, findings, or conclusions” 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). More specifically, when reviewing
agency determinations, findings, or conclusions for substantial evidence, the court
assesses whether the agency action is reasonable given the record as a whole. Nippon
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Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). Substantial
evidence has been described as “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” DuPont Teijin Films USA v. United States,
407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S.
197, 229 (1938)). Substantial evidence has also been described as “something less than
the weight of the evidence, and the possibility of drawing two inconsistent conclusions
from the evidence does not prevent an administrative agency’s finding from being
supported by substantial evidence.” Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620
(1966). Fundamentally, though, “substantial evidence” is best understood as a word
formula connoting reasonableness review. 3 Charles H. Koch, Jr. Administrative Law and
Practice § 9.24[1] (3d ed. 2018). Therefore, when addressing a substantial evidence issue
raised 	by 	a 	party, 	the 	court 	analyzes 	whether 	the 	challenged 	agency 	action
“was reasonable given the circumstances presented by the whole record.” 8A West’s Fed.
Forms, National Courts § 3.6 (5th ed. 2018).
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Res. Def. Council, Inc., 467 U.S. 837, 842–45 (1984), governs judicial review of
Commerce's interpretation of the antidumping statute. See United States v. Eurodif
S.A., 555 U.S. 305, 316 (2009) (Commerce's “interpretation governs in the absence of
unambiguous statutory language to the contrary or unreasonable resolution of language
that is ambiguous.”); see also Harry T. Edwards & Linda A. Elliott, Federal Standards of
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Review 273–280 (3d ed. 2018) (“Comparing and Contrasting the Principal Standards of
Review”).
II. Discussion
The portion of this action now before the court involves Commerce’s exclusion
regulation, 19 C.F.R. § 351.204(e)(1), adopted in 1997 as part of a comprehensive
regulatory update following the statutory amendments made by the Uruguay Round
Agreements Act. See Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat.
4809 (1994) (“URAA”). Section 351.204(e)(1) provides that Commerce “will exclude from
an affirmative final determination . . . , any exporter or producer for which [Commerce]
determines an individual weighted-average dumping margin . . . of zero or de minimis.”
19 C.F.R. § 351.204(e)(1). Although Commerce assigned the separate rate respondents
a dumping margin of zero, which Commerce determined by averaging the individual
weighted average dumping margins of the mandatory respondents, Commerce did not
exclude the separate rate respondents because they had not been individually examined.
Fifth Remand Results at 24–25.
During notice and comment for § 351.204, Commerce explained that the regulation
“provides that any exporter or producer that is individually examined and that receives an
individual weighted-average dumping margin . . . of zero or de minimis will be excluded
from an order.” Antidumping Duties; Countervailing Duties: Proposed Rulemaking,
61 Fed. Reg. 7308, 7315 (Feb. 27, 1996). Commerce further explained:
As for former §§ 353.14 and 355.14, . . . , these provisions are no longer
necessary in light of the amendments to the statute made by the URAA, . .
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. . These provisions, notwithstanding their titles, functioned as a mechanism
for considering requests by voluntary respondents to be investigated. As
stated by the Department when it adopted § 351.14:
If the Department includes a producer or reseller in its
investigation and determines that the producer or reseller had
no dumping margin during the period of investigation, the
Department would automatically exclude that producer or
reseller from the antidumping duty order, even if the producer
or reseller did not request exclusion under the procedures
described in [§ 353.14]. The purpose of this section merely is
to provide an opportunity for producers and resellers that the
Department might not otherwise include in its investigation to
request 	that 	the 	Department 	specifically 	include 	and
investigate them.
Final Rule (Antidumping Duties), 54 Fed. Reg. 12,742, 12,748 (1989). . . .
Given their original purpose, §§ 353.14 and 355.14 have become
superfluous in light of section 782(a) of the Act and § 351.204(d) (which
establish new procedures for dealing with voluntary respondents) and
§ 351.204(e)(3) (which deals with exclusion requests in CVD investigations
conducted on an aggregate basis). Under these provisions, decisions on
exclusions will be based on a firm’s actual behavior, as opposed to
assertions regarding its possible future behavior.
Antidumping Duties; Countervailing Duties, 62 Fed. Reg. 27,295, 27,311 (1997) (final
rule). In the Fifth Remand Results Commerce explained that “the revised statutory
language and regulations allowed for companies not selected for individual examination
to request participation as voluntary respondents.” Fifth Remand Results at 13. In this
investigation, 	however, 	Commerce 	rejected 	all 	voluntary 	examination 	requests,
foreclosing any path to exclusion for respondents seeking an individual weighted average
margin. See Decision Memorandum at cmt. 43 (“it was neither necessary nor practicable
to individually examine the companies that requested voluntary respondent treatment”).
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Plaintiffs and Defendant argue that the action should be resolved under the first
prong of Chevron, contending that the statute mandates one and only one outcome on
the 	issue 	before 	the 	court: 	whether 	separate 	rate 	respondents—in 	a 	resource-
constrained, non-market economy investigation—must be excluded from the antidumping
duty order if they are assigned a zero percent all-others rate. See Armstrong Cmts. at 4
(arguing that the “governing statute is crystal clear” and mandates exclusion of all
producers or exporters assigned a de minimis rate); Fine Furniture Cmts. at 5 (“Statute
Requires Exclusion Where Commerce Assigns a Zero/De Minimis Rate”); Def.’s Reply
at 11–13 (“The Statute Unambiguously Precludes The Relief That The Separate Rate
Plaintiffs Seek”).1
1 The court finds unpersuasive Defendant and Changzhou Hawd’s arguments about
Commerce’s prior practice for dealing with exclusion from an order (albeit disagreeing
about what that practice is). Commerce reaches back to a 28-year old determination in
which Commerce did not exclude respondents assigned an “all-others” rate of zero. See
Fifth Remand Results at 12 (citing Certain Small Business Telephone Systems and
Subassemblies Thereof from Taiwan, 54 Fed. Reg. 42,543 (Oct. 17, 1989) (“SBTS from
Taiwan”). Changzhou Hawd identifies one prior determination in which Commerce
appears to have treated respondents assigned a de minimis “all-others” rate as though
they were excluded despite a final affirmative determination. See Changzhou Hawd Cmts.
at 5–7 (citing Certain Automotive Replacement Glass Windshields from the People's
Republic of China, 72 Fed. Reg. 70,294 (Dec. 11, 2007) (Amend. Final Determ.) (“Glass
Windshields”). SBTS from Taiwan pre-dates all the applicable statutory and regulatory
authority. And the issue of exclusion was not expressly litigated in Glass Windshields.
Therefore, the court has not found either administrative determination to be helpful or
informative. The court likewise did not find informative or helpful, Changzhou Hawd’s
reliance 	on 	market 	economy 	administrative 	proceedings 	that 	resulted 	in 	negative
determinations.
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The court does not believe Congress had this precise question in mind when it
drafted the applicable provisions:
19 U.S.C. § 1673d(a)(4) requires Commerce to exclude any weighted average
dumping margin that is de minimis:
(4) De minimis dumping margin
[For a final determination], [Commerce] shall disregard any weighted
average dumping margin that is de minimis . . . .2
19 U.S.C. § 1677(35)(B) defines the term “weighted average dumping margin”:
The term “weighted average dumping margin” is the percentage determined
by dividing the aggregate dumping margins determined for a specific
exporter or producer by the aggregate export prices and constructed export
prices of such exporter or producer.
19 U.S.C. § 1673d(b)(5) describes the term “all-others rate”:
(5) Method for determining estimated all-others rate
(A) G ENERAL RULE
. . . the estimated all-others rate shall be an amount equal to the
weighted average of the estimated weighted average dumping
margins 	established 	for 	exporters 	and 	producers 	individually
investigated, excluding any zero and de minimis margins, and any
margins determined entirely under section 1677e of this title.
2 The Statement of Administrative Action notes that “{e}xporters or producers with
de minimis margins will be excluded from any affirmative determination.” Statement of
Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Doc.
No. 103-316, at 844 (1994), reprinted in 1994 U.S.C.C.A.N. 4040. Additionally, Article 5.8
of the Anti-Dumping Agreement requires that “{t}here shall be immediate termination in
cases where the authorities determine that the margin of dumping is de minimis, or that
the volume of dumped imports, actual or potential, or the injury is negligible.” Agreement
on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, art.
5.8.
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(B) EXCEPTION
If the estimated weighted average dumping margins established for
all exporters and producers individually investigated are zero or de
minimis margins, or are determined entirely under section 1677e of
this title, the administering authority may use any reasonable method
to establish the estimated all-others rate for exporters and producers
not 	individually 	investigated, 	including 	averaging 	the 	estimated
weighted average dumping margins determined for the exporters
and producers individually investigated.
19 U.S.C. § 1673d(c)(1)(B)(i) requires Commerce to
(I) determine the estimated weighted average dumping margin for each
exporter and producer individually investigated, and
(II) determine, in accordance with paragraph (5), the estimated all-others
rate for all exporters and producers not individually investigated. . . .
19 U.S.C. § 1677f-1(c) elaborates upon Section 1673d(c)(1)(B)(I):
(1) G ENERAL RULE In determining weighted average dumping margins under
section . . . 1673d(c) . . . of this title, [Commerce] shall determine the
individual weighted average dumping margin for each known exporter and
producer of the subject merchandise.
(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 investigation or review,
[Commerce] may determine the weighted average dumping margins for a
reasonable number of exporters or producers by limiting its examination
to—
. . .
(B) exporters and producers accounting for the largest volume of
the subject merchandise from the exporting country that can be
reasonably examined.
Section 1677f-1(c)(1) obligates Commerce to determine an individual weighted average
dumping margin for all respondents. This is rare in practice. Here, Commerce did not
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individually investigate the hundred-some-odd producer/exporters of multilayered wood
flooring from the PRC. Resource constrained, Commerce selected the two largest volume
producers/exporters 	as 	mandatory 	respondents. 	Both 	of 	them, 	after 	court-ordered
remands, were assigned de minimis dumping margins (zero percent) and were excluded
from the Order. See Baroque Timber Indus. (Zhongshan) Co. v. United States, Court
No. 12-00007, Final Results of Redetermination 3 at 52 (Nov. 14, 2013) (“First Remand
Results”).
Not so long-ago Commerce’s calculation of de minimis margins for all individually
investigated respondents would have led to termination of an order ab initio because there
was no basis for an affirmative less than fair value determination (no evidence of
dumping). Things changed with Commerce’s adoption of its PRC-wide entity policy, see
Import Administration Policy Bulletin 05.1: Separate-Rates Practice and Application of
Combination 	Rates 	in 	Antidumping 	Investigations 	involving 	Non-Market 	Economy
Countries (Apr. 5, 2005), which effectively enables Commerce to make an affirmative less
than 	fair 	value 	determination 	even 	though 	all 	individually 	investigated 	mandatory
respondents receive de minimis margins, which is what happened in this action. See Final
3 	This 	action 	was 	previously 	consolidated 	with 	an 	action 	challenging 	the 	Final
Determination brought by the mandatory respondents. See Baroque Timber Indus.
(Zhongshan) Co. v. United States, Court No. 12-00007. Commerce’s results of the first
remand in this matter assigned de minimis rates to the mandatory respondents, and
assigned a rate of 6.41 percent to the separate rate respondents based on a simple
average of the three zero-percent mandatory respondent margins and a PRC-wide entity
margin of 25.62 percent. See First Remand Results at 45.
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Determination, 76 Fed. Reg. at 64,322. Non-participating companies were deemed non-
cooperative and assumed to be part of a government-controlled PRC-wide entity. Id. They
were 	assigned 	the 	highest 	calculated 	transaction-specific 	rate 	among 	mandatory
respondents, 58.84 percent, as total adverse facts available. Id. Despite no direct
evidence 	of 	dumping, 	Commerce 	here 	imposed 	an 	antidumping 	duty 	order 	on
multilayered flooring from the PRC based on indirect evidence (an adverse inference)
against 	the 	PRC-wide 	entity. 	Lumber 	Liquidators’ 	argument 	that 	Commerce 	must
terminate the Order ab initio never comes to terms with this aspect of Commerce’s
affirmative determination. They fail to challenge either the PRC-wide entity policy or the
PRC-wide rate. See generally Lumber Liquidators Cmts. The court therefore must sustain
Commerce’s decision to deny Lumber Liquidators’ request that Commerce terminate the
Order ab initio.
Commerce ultimately did exclude the mandatory respondents from the Order.
To derive the separate rate, Commerce averaged the zero rates assigned to the
mandatory respondents under the “expected method”. See Fifth Remand Results at 8.
The 	question 	is 	whether 	that 	zero 	percent 	“all-others 	rate”, 	19 	U.S.C.
§§ 1673d(c)(1)(B)(i)(II), 1673d(c)(5), constitutes “any” de minimis weighted average
dumping margin that Commerce must “disregard” pursuant to 19 U.S.C. § 1673d(a)(4).
The term “any” is broad, and the “all-others rate” is just a proxy for the individual
weighted average dumping margins Commerce, in theory, should calculate for all
respondents pursuant to § 1677f-1(c)(1) (which, as noted above, is rare in practice).
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Article 5.8 	of 	the 	Anti-Dumping 	Agreement 	also 	speaks 	in 	broad 	terms, 	requiring
“immediate termination in cases where the authorities determine that the margin of
dumping is de minimis….” Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994, art. 5.8. It is entirely possible, therefore, that
Congress intended Commerce to disregard a zero percent all-others rate (and exclude
the separate rate respondents from the final affirmative dumping determination). At the
same time, however, the “all-others rate” is derivative in nature, and because it has
general applicability to all non-examined separate rate respondents, it is not really quite
as “specific” as what is contemplated by the “weighted average dumping margin” of
§ 1677(35)(B), or an “individual” weighted average dumping margin of § 1677f-1(c)(1).
That means there is some free play in the statute. And that, in turn, implicates the
second prong of Chevron, under which the court must defer to Commerce's permissible
construction of the statute. See Chevron, 467 U.S. at 842–43; Eurodif S.A., 555 U.S. at
316 (An agency's “interpretation governs in the absence of unambiguous statutory
language 	to 	the 	contrary 	or 	unreasonable 	resolution 	of 	language 	that 	is
ambiguous.”); Wheatland Tube Co. v. United States, 495 F.3d 1355, 1361 (Fed. Cir.
2007) (To determine whether Commerce's interpretation is reasonable, the court “may
look to ‘the express terms of the provisions at issue, the objectives of those provisions,
and the objectives of the antidumping scheme as a whole.’”). The court cannot conclude
that Commerce’s desire to treat “exclusion as an extraordinary measure, and one that
should only be available in limited circumstances to companies that have been subject to
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individual investigation and all that entails (i.e., providing full and complete questionnaire
responses, cooperating with the Department, subject to verification, etc.)”, Fifth Remand
Results at 25, unreasonably resolves ambiguous statutory language, or advances a policy
prescription at odds with the antidumping statute.
The separate rate respondents argue that Commerce waited too long over the
course of the litigation to apply the exclusion regulation. See Armstrong Cmts. at 2–3;
Fine Furniture Cmts. at 14–19; see also id. at 15–17 (highlighting that plaintiffs expressly
requested exclusion from the order as part of their initial Complaint, subsequent motions
for summary judgment on the agency record, in their comments and briefing on the prior
remand redeterminations, and in oral argument before the Federal Circuit). Defendant
acknowledges that plaintiffs raised the issue of exclusion early on, but avers that
Commerce was not squarely presented with the issue of whether separate rate plaintiffs
should be excluded from the order until the Fifth Remand Results. See Def.’s Reply at 9–
10 (“We acknowledge that certain separate rate plaintiffs have long taken the position
that they should be excluded from the order. But it was not necessary for Commerce to
evaluate the merits of plaintiffs’ argument until the Federal Circuit reversed this Court’s
judgment and Commerce assigned a zero margin to the separate rate plaintiffs.” (internal
citation omitted)).
The court understands that it would have been preferable if Commerce had raised
the exclusion regulation before the Federal Circuit in Changzhou Hawd VI, and explained
that there would be no substantive effect to assigning the separate rate respondents a
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zero percent margin. That omission, however inefficient, does not invalidate the regulation
or mute its operation. It was duly promulgated in 1997 and carries the force of law. What
does give the court pause, however, is Commerce’s application of the exclusion
regulation to the Voluntary Applicants. Given the history of the exclusion regulation in
which 	concerns 	about 	limiting 	exclusion 	to 	selected/mandatory 	respondents 	were
mitigated 	through 	the 	availability 	of 	voluntary 	examination, 	there 	is 	an 	inherent
arbitrariness in Commerce (1) issuing a blanket refusal to entertain voluntary examination
requests, and (2) subsequently denying exclusion to the Voluntary Applicants that were
assigned a “representative” separate rate of zero (which again, is just a proxy for the
individual weighted average dumping margins Commerce should theoretically calculate
for all respondents).
Defendant notes that the Voluntary Applicants did not challenge Commerce’s
respondent selection. See Def.’s Reply at 12, 22 (explaining that Commerce’s respondent
selection decisions have not been challenged). Although they chose not to appeal
Commerce’s refusal to conduct any voluntary examinations, the Voluntary Applicants may
nevertheless 	challenge 	Commerce’s 	separate 	and 	distinct 	decision 	denying 	them
exclusion from the Order. That determination (like many Commerce determinations), just
happens to comprise numerous other decisions Commerce made through the course of
the proceeding: mandatory respondent selection, treatment of voluntary examination
requests, the calculation of each of the mandatory respondents’ margins, and the
calculation of the separate rate, among others. Commerce’s determination that resource
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constraints precluded voluntary examinations may itself have been reasonable. Having
made that decision, Commerce’s subsequent decision to refuse to exclude Voluntary
Applicants assigned a zero percent margin is not.
Commerce’s exclusion regulation requires individual examination for exclusion
because, as a policy matter, it wants to confirm that a specific party is not in fact dumping.
That policy carries a corresponding inference or assumption that a party is trading unfairly
unless it can demonstrate with its own direct evidence that it is not. In explaining the
enactment history of the exclusion regulation, Commerce acknowledged that “the revised
statutory language and regulations allowed for companies not selected for individual
examination to request participation as voluntary respondents.” Fifth Remand Results
at 13.
The court believes Commerce’s application of its exclusion regulation to the
Voluntary 	Applicants 	it 	assigned 	“representative” 	zero 	percent 	margins 	has 	two
insurmountable problems. The first is Commerce’s refusal to conduct any voluntary
examinations, preventing the Voluntary Applicants from demonstrating directly their own
evidence of fair trading. The second is Commerce’s continuing assumption or inference
that Voluntary Applicants denied individual examination and ultimately assigned a
“representative” zero percent margin were nevertheless unfairly trading, precluding
exclusion. 	The 	court 	questions 	how 	a 	reasonable 	mind 	could 	maintain 	such 	an
assumption or inference against the Voluntary Applicants. With that said, the court does
believe there is a material difference between those separate rate respondents that
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requested voluntary examination, and those that did not. In the court’s view, those that
did not cannot overcome the regulation and the underlying inference/assumption that they
were unfairly trading despite being assigned the same “representative” zero percent
margin.
As for remedy, the court typically remands for further consideration when it
identifies unreasonableness or arbitrariness in agency decision-making. See Harry T.
Edwards & Linda A. Elliott, Federal Standards of Review 276–77 (3d ed. 2018) (“When a
court finds that an agency action is arbitrary and capricious, it will normally remand the
case to the agency for further consideration. . . . Thus when an administrative action is
found to be arbitrary and capricious, an agency has an opportunity to revisit its decision
and provide an adequate justification or reach a different conclusion.”). Here, though, too
much time has passed for Commerce to individually examine the Voluntary Applicants.
Cf. Changzhou Hawd Flooring Co. v. United States, 39 CIT ___, ___, 44 F. Supp. 3d
1376, 1390 (2015) (“while Commerce retains the discretion to reasonably reopen the
record, its decision to conduct a full individual investigation of Changzhou Hawd at such
a late date is arbitrary and capricious”). Also, this is the seventh court decision, reviewing
the sixth administrative determination. And there may well be an appeal. 4 A final judgment
moves this action toward final resolution. The court does not believe a remand for
4 After many court decisions and remands, trade cases have a way of taking on the feel
of Jarndyce and Jarndyce: “Jarndyce and Jarndyce drones on. This scarecrow of a suit
has, over the course of time, become so complicated, that no man alive knows what it
means.” Charles Dickens, Bleak House, Chapter 1 (1852–53).
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reconsideration is necessary. Instead, the court believes the proper remedy is entry of
judgment declaring Commerce’s failure to exclude the Voluntary Applicants arbitrary, and
directing Commerce to exclude them from the Order ab initio.
III. Conclusion
Based on the foregoing, the court sustains Commerce’s decision (1) denying
Lumber Liquidators’ request to terminate the Order ab initio, and (2) denying exclusion
from the Order for the separate rate respondents 	that 	did not request voluntary
examination. For the Voluntary Applicants, the court determines that Commerce arbitrarily
applied its exclusion regulation, 19 C.F.R. § 351.204(e)(1), and will enter judgment
ordering Commerce to exclude them from the Order. Judgment will enter accordingly.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: July 3, 2018
New York, New York
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