Building Material Distributors, Inc. v. United States

1:20-cv-00116Cit9 juin 2021

Texte intégral

Slip Op. 21-71
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Leo M. Gordon, Judge
Consol. Court No. 20-00103
OPINION
[Commerce’s Final Results sustained.]
Dated: June 9, 2021
Gregory S. Menegaz, J. Kevin Horgan, and Alexandra H. Salzman, deKieffer &
Horgan, PLLC of Washington, 	DC for Plaintiff Xi’an Metals & Minerals Import &
Export Co., Ltd.
XI’AN METALS & MINERALS IMPORT & EXPORT
CO., LTD.,
Plaintiff,
and
SHANXI PIONEER HARDWARE INDUSTRIAL
CO., LTD.,
Consolidated Plaintiff,
and
BUILDING MATERIAL DISTRIBUTORS, INC.,
Consolidated Plaintiff,
v.
UNITED STATES,
Defendant,
and
MID CONTINENT STEEL & WIRE, INC.,
Defendant-Intervenor.
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Jeffrey S. Neeley and Stephen W. Brody, Husch Blackwell, LLP of Washington,
DC for Consolidated Plaintiff Shanxi Pioneer Hardware Industrial Co., Ltd.
Lizbeth R. Levinson, Ronald M. Wisla, and Brittney R. Powell, Fox Rothschild LLP
of Washington, DC for Consolidated Plaintiff Building Material Distributors, Inc.
Sosun Bae, Senior Trial Counsel, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice of Washington, DC, for Defendant United States. With her on
the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson,
Director, Patricia M. McCarthy, Assistant Director. Of counsel was Ayat Mujais, Attorney,
U.S. Department of Commerce, Office of Chief Counsel for Trade Enforcement and
Compliance of Washington, DC.
Adam Gordon, Lauren Fraid, Jennifer Smith, and Ping Gong, The Bristol Group
PLLC of Washington, DC for Defendant-Intervenor Mid Continent Steel & Wire, Inc.
Gordon, Judge: 	This action involves the U.S. Department of Commerce’s
(“Commerce”) final results of the antidumping (“AD”) administrative review issued as
Certain Steel Nails from the People’s Republic of China, 85 Fed. Reg. 22,399 (Dep’t of
Commerce Apr. 22, 2020) (final results of AD admin. review and final determ. of
no shipments) 	(“Final 	Results”), 	and 	the 	accompanying 	Issues 	and 	Decision
Memorandum 	(Dep’t 	of 	Commerce 	Apr. 	15, 	2020),
https://enforcement.trade.gov/frn/summary/prc/2020-08526-1.pdf (last visited this date)
(“Decision Memorandum”).
Before the court are the motions for judgment on the agency record under USCIT
Rule 56.2 filed by Plaintiff Xi’an Metals & Minerals Import & Export Co., Ltd. (“Xi’an
Metals”), Consolidated Plaintiff Shanxi Pioneer Hardware Industrial Co., Ltd. (“Pioneer”),
and Consolidated Plaintiff Building Material Distributors, Inc. (“BMD”). See Mem. in Supp.
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of Xi’an Metals’ Rule 56.2 Mot. for J. on the Agency R., ECF No. 31 1 (“Xi’an Metals Br.”);
Mem. in Supp. of Pioneer’s Rule 56.2 Mot. for J. on the Agency R., ECF No. 29 (“Pioneer
Br.”); Mem. in Supp. of BMD’s Rule 56.2 Mot. for J. on the Agency R., ECF No. 32
(“BMD Br.”); see also Def.’s Resp. to Pl.’s Rule 56.2 Mot. for J. on the Agency R., ECF
No. 33 (“Def.’s Resp.”); Def.-Intervenor Mid-Continent Steel & Wire Inc.’s Resp. to
Pls.’ Rule 56.2 Mots. for J. on the Agency R., ECF No. 36 (“Def.-Intervenor’s Resp.”);
Pl.’s Reply Br., ECF No. 41 (“Xi’an Metals Reply”); Reply Br. of Pioneer, ECF No. 39
(“Pioneer Reply”); Reply Br. of BMD, ECF No. 42 (“BMD Reply”). 	The court has
jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended,
19 U.S.C. § 1516a(a)(2)(B)(iii) (2018), 2 and 28 U.S.C. § 1581(c) (2018). For the reasons
set forth below, the court sustains Commerce’s Final Results.
I. Standard of Review
For 	administrative 	reviews 	of 	antidumping 	duty 	orders, 	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.”
19U.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 Steel Corp. v. United States,
458 F.3d 1345, 1350-51 (Fed. Cir. 2006); see also Universal Camera Corp. v. NLRB,
1 All citations to parties’ briefs and the agency record are to their confidential versions
unless otherwise noted.
2 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2018 edition.
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340 U.S. 474, 488 (1951) (“The substantiality of evidence must take into account
whatever in the record fairly detracts from its weight.”). 	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. 2021). 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. 2021).
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 Tariff Act. See United States v. Eurodif S.A., 555 U.S.
305, 316 (2009) (An agency’s “interpretation governs in the absence of unambiguous
statutory language to the contrary or unreasonable resolution of language that is
ambiguous.”).
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II. Discussion
In the underlying administrative review, Commerce selected three mandatory
respondents for examination pursuant to the sampling methodology of 19 U.S.C.
§ 1677f-1(c)(2)(A) after finding conditions that raised enforcement concerns. 	Decision
Memorandum at 9–10; see generally Sample Methodology Notice, 78 Fed. Reg. 65,963,
65,964–65 (“[T]he Department will normally rely on sampling for respondent selection
purposes in AD administrative reviews when the following conditions are met: (1) There
is a request by an interested party for the use of sampling to select respondents; (2) the
Department has the resources to examine individually at least three companies for the
segment; (3) the largest three companies (or more if the Department intends to select
more than three respondents) by import volume of the subject merchandise under review
account for normally no more than 50 percent of total volume; and (4) information
obtained by or provided to the Department provides a reasonable basis to believe or
suspect that the average export prices and/or dumping margins for the largest exporters
differ from such information that would be associated with the remaining exporters.”).
Specifically, Commerce found that:
in each of the nine prior administrative reviews under this
order, 	Stanley 	has 	consistently 	been 	one 	of 	the 	largest
exporters, 	and 	for 	this 	reason 	has 	been 	selected 	as 	a
mandatory 	respondent 	in 	those 	prior 	reviews. 	Stanley
consistently has been a cooperative respondent, its average
calculated 	weighted 	average 	dumping 	margin 	over 	the
previous 	nine 	administrative 	reviews 	is 	6.76 	percent.
In contrast, in each of the nine prior administrative reviews,
the other mandatory respondents either obtained a much
higher calculated margin, did not qualify for a separate rate,
or were otherwise non-cooperative and received a margin
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based on total {AFA}. 	We further note that, in the one new
shipper review conducted under this order, the respondent
received a calculated margin of 34.14 percent (significantly
higher than Stanley’s 15.43 percent margin for the partially
overlapping period of review). 	Thus, the average margin for
respondents 	other 	than 	Stanley, 	including 	non-calculated
margins, is 74.96 percent. 	Even when we do not include
those 	non-calculated 	margins, 	the 	average 	margin 	for
respondents other than Stanley is 57.00 percent through the
preliminary results of the 2016-2017 administrative review.
Moreover, 	throughout 	the 	history 	of 	the 	proceeding, 	the
China-wide rate, assigned to those respondents who have
failed to demonstrate their independence from the China-wide
entity, has consistently been 118.04 percent.
Decision Memorandum at 9–10. 	The mandatory respondents selected for examination
were Stanley Works (Langfang) Fastening Systems Co., Ltd. and Stanley Black & Decker,
Inc. (collectively “Stanley”), Shanxi Pioneer Hardware Industrial Co., Ltd., and Tianjin
Universal Machinery Imp. & Exp. Corporation (“Tianjin Universal”). See id. at 10.
In the Final Results, Commerce calculated a 2.15% margin for Stanley, a 118.04%
margin for Pioneer, and a 118.04% margin for Tianjin Universal. 	See Final Results,
85 Fed. Reg at 22,400. 	Commerce determined that both Pioneer and Tianjin Universal
failed to cooperate in the subject administrative review to the best of their ability, and
accordingly, 	applied 	total 	adverse 	facts 	available 	(“total 	AFA”). 	See 	Decision
Memorandum at 4–5. 	Commerce averaged the margins of the three mandatory
respondents, including the margins based on total AFA, weighted by the import share of
their strata, to derive a “sample” margin of 41.75%. See Calculation of the Sample Margin
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for Respondents Not Selected for Individual Examination, PD 3 264. Commerce applied
this 41.75% rate to non-selected respondents who had established that they operated
free from Chinese Government control.
Pioneer challenges Commerce’s decision to apply total AFA and assign a 118.04%
rate to Pioneer due to its failure to report its factors of production (“FOPs”) on a CONNUM-
specific 4 basis as unlawful and unreasonable. 	See generally Pioneer Br. 	Xi’an Metals
and BMD are importers assigned the separate rate margin of 41.75% and challenge
Commerce’s determination to include the total AFA rates of Pioneer and Tianjin Universal
in the calculation of the separate rate as unlawful and unreasonable. See generally Xi’an
Metals Br. & BMD Br.
A. Pioneer’s Challenge to AFA
Commerce may rely on “facts otherwise available,” if an interested party:
withholds 	information 	that 	has 	been 	requested 	by
[Commerce] 	… 	fails 	to 	provide 	such 	information 	by 	the
deadlines for submission of the information or in the form and
manner requested … significantly impedes a proceeding
under this subtitle, or provides such information but the
information cannot be verified[Commerce] shall … use facts
3 “PD” refers to a document in the public administrative record, which is found in ECF
No. 25-4, unless otherwise noted. 	“CD” refers to a document in the confidential
administrative record, which is found in ECF No. 25-5, unless otherwise noted.
4 A “CONNUM” is a contraction of the term “control number,” and is Commerce jargon for
a unique product (defined in terms of a hierarchy of specified physical characteristics
determined in each antidumping proceeding). 	All products whose product hierarchy
characteristics are identical are deemed to be part of the same CONNUM and are
regarded as “identical” merchandise for purposes of the price comparison. The hierarchy
of 	product 	characteristics 	defining 	a 	unique 	CONNUM 	varies 	from 	case 	to 	case
depending on the nature of the merchandise under investigation.
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otherwise available in reaching the applicable determination
under this title.
19 U.S.C. § 1677e(a)(2). 	Additionally, Commerce may apply facts available with an
adverse inference:
[i]f [Commerce] … finds that an interested party has failed to
cooperate by not acting to the best of its ability to comply with
a request for information …, [Commerce] … may use an
inference that is adverse to the interests of that party in
selecting from among the facts otherwise available.
19 U.S.C. § 1677e(b)(1).
In the preliminary results, Commerce calculated a margin for Pioneer based on the
sales and FOP data submitted by Pioneer. 	See Certain Steel Nails from the People’s
Republic of China, 84 Fed. Reg. 55,906, PD 241 (Dep’t of Commerce Oct. 18, 2019)
(prelim. 	results 	of 	AD 	admin. 	review 	and 	prelim. 	determ. 	of 	no 	shipments), 	and
accompanying Preliminary Decision Memorandum, PD 224. 	In the Final Results,
Commerce determined that Pioneer failed to comply with requests for information and did
not act to the best of its ability. 	See Decision Memorandum at 32. 	Consequently,
Commerce applied total AFA to Pioneer and assigned it a rate of 118.04%. 	See Final
Results.
In the Final Results, Commerce determined that Pioneer had “repeatedly withheld
requested information, significantly impeded the proceeding, failed to cooperate by not
acting to the best of its ability” based on Pioneer’s failure to comply with Commerce’s
instructions to report CONNUM-specific FOPs or “to maintain appropriate data such that
it could properly report FOPs.” 	See Decision Memorandum at 32–33, 35 (“By not
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reporting CONNUM-specific FOPs as requested, Pioneer has withheld information that
has been requested of it, failed to provide data in the form and manner requested, and
has significantly impeded this proceeding. Therefore, the application of facts available is
appropriate pursuant to section 776(a) of the Act.”). 	Commerce found that “Pioneer’s
refusal to make any attempt to develop more accurate and specific FOPs demonstrates
a clear failure to report necessary information in the form and manner requested.” 	Id.
at 33. 	Commerce explained that it would apply an adverse inference in selecting facts
available because of Pioneer’s failure to develop an alternate reporting methodology “that
would 	capture 	product-specific 	consumption,” 	despite 	Commerce 	explicitly 	asking
Pioneer to develop such a methodology in a supplemental questionnaire. See id. at 34.
Accordingly, Commerce determined:
because 	Pioneer 	failed 	to 	cooperate 	by 	not 	maintaining
adequate records and by not developing a methodology to
report product-specific costs (information which is essential to
the 	accurate 	calculation 	of 	Pioneer’s 	dumping 	margin),
Pioneer failed to act to the best of its ability to comply with a
request for information. 	Therefore, we use an inference
adverse in selecting the facts otherwise available pursuant to
section 776(b) of the Act.
Id.
At the conclusion of the third administrative review (“AR3”), Commerce advised
respondents that the agency intended “to require … that respondents … report all FOPs
data on a CONNUM-specific basis using all product characteristics in subsequent
reviews.” Id. at 32 (internal quotation and citation omitted). Here, Commerce noted that
by the time of this review (the 10th AR) “documentation and data collection requirements
should now be fully understood,” and expected respondents to submit data on a
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CONNUM-specific basis. 	Id. (internal quotation and citation omitted). 	Despite that
expectation, Pioneer failed to explain why it was unable to provide the information in the
form and manner requested by Commerce, nor did Pioneer suggest any alternative
methods by which it could submit similar information, despite having been on notice of
Commerce’s reporting requirement since AR3.
Pioneer 	contends 	that 	Commerce’s 	requirement 	that 	respondents 	report
CONNUM-specific costs amounts to a “rule” that Commerce “promulgated … without
proper notice and comment rule making.” 	See Pioneer Br. at 5–8 (citing Administrative
Procedure Act (“APA”)). Pioneer also argues that “Commerce’s rule regarding CONNUM-
specific reporting for nails is arbitrary and capricious because Commerce never explains
why its requirements are necessary in this case but not for other products.” Id. at 8–15.
Pioneer further maintains that Commerce provided insufficient notice as to its CONNUM-
specific reporting requirement; that this reporting requirement violated the agency’s own
regulations; that Commerce did not explain why total adverse facts available was
necessary or warranted when Pioneer cooperated by supplying the requested information
in its normal books and records; and that Commerce’s application of AFA to Pioneer is
unreasonable. See id. at 15–30.
The court now turns to Pioneer’s argument that the CONNUM-specific reporting
requirement is tantamount to a “rule” promulgated without the requisite notice-and-
comment rulemaking required under the APA. Defendant disagrees, contending that the
APA’s notice and comment requirement “applies to legislative rules and does not apply
to ‘interpretive rules, general statements of policy, or rules of agency organization,
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procedure, or practice.’” Def.’s Resp. at 12–13 (quoting Apex Frozen Foods Private Ltd.
v. United States, 40 CIT ___, ___, 144 F. Supp. 3d 1308, 1319–20 (2016), aff’d, 862 F.3d
1337 (Fed. Cir. 2017)). 	In Apex Frozen Foods, the court adopted the U.S. Court of
Appeals for the District of Columbia Circuit’s framework for determining whether an
agency rule is a legislative rule that must undergo notice-and-comment rulemaking:
(1) whether in the absence of the rule there would not be an
adequate legislative basis for enforcement action or other
agency action to confer benefits or ensure the performance of
duties, (2) whether the agency has published the rule in the
Code of Federal Regulations, (3) whether the agency has
explicitly 	invoked 	its 	general 	legislative 	authority, 	or
(4) whether the rule effectively amends a prior legislative rule.
See Apex Frozen Foods, 40 CIT at ___, 144 F. Supp. 3d at 1320 (citing Am. Mining Cong.
v. Mine Safety Admin., 995 F.2d 1106, 1112 (D.C. Cir. 1993)). The facts of this case only
implicate the third factor as to whether the CONNUM-specific reporting requirement
constitutes a legislative rule. The short answer is “no.”
Despite 	Pioneer’s 	contention 	to 	the 	contrary, 	Commerce’s 	adoption 	of 	a
CONNUM-specific reporting requirement does not amount to the implementation of a
legislative rule that would require notice-and-comment rulemaking. 	While arguing that
19 U.S.C. § 1677b “expresses a preference for Commerce to rely on the company’s
normal books and records if kept in accordance with generally accepted accounting
principles,” see Pioneer Br. at 13, Pioneer ignores the further requirement of the statute
that such records must also “reasonably reflect the costs associated with the production
and sale of the merchandise.” 19 U.S.C. § 1677b(f)(1)(A). Here, Commerce found that
Pioneer’s failure to submit its cost information on a CONNUM-specific basis meant that
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Pioneer’s cost information did not reasonably reflect the costs of production of the
merchandise. 	See 	Decision 	Memorandum 	at 	32–35 	(emphasizing 	that
CONNUM-specific cost information Commerce requested was “information which is
essential to the accurate calculation of Pioneer’s dumping margin”). 	As Commerce
explained:
[a]fter initially not requiring product-specific reporting in early
segments 	of 	this 	proceeding, 	in 	the 	third 	administrative
review, in 2013, we stated that Commerce ‘intends to require
… [that] respondents for this case report all FOPs data on a
CONNUM-specific basis using all product characteristics in
subsequent reviews, as documentation and data collection
requirements should now be fully understood.’ Pioneer, by its
own 	account, 	did 	not 	heed 	our 	instructions 	to 	maintain
appropriate data such that it could properly report FOPs.
Id. at 32 (quoting Certain Steel Nails from the People's Republic of China, 78 Fed. Reg.
16,651 (Dep’t of Commerce Mar. 18, 2013) (Final Results of AR3), and accompanying
Issues and Decision Memorandum at cmt. 5).
In announcing in AR3 that it would require respondents to report CONNUM-
specific data, Commerce determined that it needed data that more accurately reflected
the costs associated with the production and sale of the subject merchandise. 	See id.
Commerce’s pronouncement reflects a statement of policy rather than the agency’s
explicit invocation of general legislative authority, which triggers the notice and comment
requirement of the APA. See Apex Frozen Foods, 40 CIT at ___, 144 F. Supp. 3d at 1320
n. 12 (citing Attorney General's Manual on the Administrative Procedure Act (1947)).
Pioneer fails to point to anything in the record that reflects the explicit invocation of
Commerce’s general legislative authority. 	It is not sufficient for a plaintiff, such as
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Pioneer, to make a general allegation; it must do something more to demonstrate a
violation of the notice and comment provision. Accordingly, the court is not persuaded by
Pioneer’s argument that Commerce’s reporting requirements violated the APA.
Pioneer argues that Commerce’s CONNUM-specific reporting requirements are
more rigorous for nails as compared to other products, and therefore Commerce’s
requirements are arbitrary and capricious. 	See Pioneer Br. at 8–12. 	In response,
Defendant maintains that “Pioneer … mischaracterizes Commerce’s alleged lack of
explanation as to why CONNUM-specific factors of production reporting is necessary for
reviews involving nails from China, but not most other products.” 	Def.’s Resp. at 11.
Defendant emphasizes that CONNUM-specific reporting is not unique to nails, noting that
“the default non-market economy questionnaire, which was issued to Pioneer in the
underlying proceeding, is issued in all other antidumping administrative reviews involving
non-market economy countries.” 	Id. (internal citations omitted). 	Pioneer’s argument is
misplaced, as the default questionnaire for non-market economy AD administrative
reviews makes clear. In particular, the default questionnaire states:
If you are not reporting factors of production using actual
quantities 	consumed 	to 	produce 	the 	merchandise 	under
review 	on 	a 	CONNUM-specific 	basis, 	please 	provide 	a
detailed explanation of all efforts undertaken to report the
actual quantity of each {factor of production} consumed to
produce the merchandise under review on a CONNUM-
specific basis.
See id. (quoting the AD Questionnaire at D-2, PD 98).
In this review, Commerce determined that CONNUM-specific FOP data was
essential in order to calculate costs in an accurate manner, and that Pioneer’s failure to
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report such data prevented Commerce from accurately calculating Pioneer’s costs. See
Decision Memorandum at 34. 	The court sees no merit in Pioneer’s argument that
Commerce acted arbitrarily and capriciously. Pioneer is unable to show how Commerce’s
CONNUM-specific 	reporting 	requirements 	in 	this 	review 	exceed 	the 	reporting
expectations that Commerce maintains in other AD administrative reviews involving non-
market economy countries, nor has Pioneer demonstrated that this CONNUM-specific
reporting requirement is unreasonable.
Relatedly, Pioneer also challenges Commerce’s refusal to accept their normal
books and records despite the fact that those records did not comply with Commerce’s
CONNUM-specific reporting requirement. 	Specifically, Pioneer argues that “Commerce
never provided any analysis of why CONNUM-specific reporting and recordkeeping was
needed with respect to the nails industry.” See Pioneer Br. at 22–25. Pioneer relies on
the decision by the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) in
Hynix Semiconductor, Inc. v. United States, 424 F.3d 1363 (Fed. Cir. 2005), contending
that the Federal Circuit held that Commerce must explain why a respondent’s records
that were kept according to generally accepted accounting practices (“GAAP”) are not
reasonably reflective of its costs before finding that those records are unsuitable for FOP
calculations. Id. at 23.
In Hynix, over the course of the proceeding the respondent switched from
expensing its research and development (“R&D”) costs to amortizing them, and it was
uncontested 	that 	both 	accounting 	methodologies 	were 	in 	accordance 	with 	the
respondent’s home nation GAAP. 	424 F.3d at 1369–70. 	Commerce refused to accept
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the respondent’s amortized R&D expenses, and instead calculated respondent’s costs by
expensing respondent’s R&D costs. 	Id. 	Commerce explained that it did not need to
accept respondent’s amortized R&D expenses, noting that although the amortized R&D
expenses 	were 	in 	accordance 	with 	GAAP, 	the 	respondent’s 	amortized 	expense
calculations would result in underreporting of the respondent’s expenses in the current
year. Id. at 1370. 	The Federal Circuit reversed the trial court’s decision to require
Commerce to accept respondent’s amortized expenses, and instead remanded the
matter 	to 	allow 	Commerce 	to 	expense 	the 	respondent’s 	R&D 	costs 	and 	reject
respondent’s GAAP-compliant records of amortized R&D expenses. 	Id. 	The appellate
court emphasized that 19 U.S.C. § 1677b(f)(1)(A) permits Commerce to disregard a
respondent’s GAAP-compliant records upon finding “that the costs do not reasonably
reflect the costs of production and should not, therefore, be used.” See id.
Here, Commerce explained that CONNUM-specific reporting yields data more
specific 	to 	the 	costs 	of 	the 	subject 	merchandise 	than 	standard 	GAAP 	records.
See Decision Memorandum at 32–33. Pioneer acknowledges that using GAAP reporting
may not reflect the actual cost of the subject merchandise. 	See Pioneer Br. at 23–24
(“Products in all cases investigated by Commerce have variations in the physical
characteristics of different models. 	If there is a difference in physical characteristics or
yield loss, how great are those differences such that only CONNUM-specific reporting will
prevent any distortions? Are these concerns even applicable to the nails produced and
sold by Pioneer?”). 	Critically though, Commerce accepts GAAP records only if they
“reasonably reflect the costs associated with the production and sale of the merchandise,”
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and the possibility of distortion can preclude Commerce from accepting such records.
See 19 U.S.C. § 1677b(f)(1)(A). In this review, Commerce considered CONNUM-specific
data to be essential for the accurate calculation of costs. 	See Decision Memorandum
at 34. Pioneer contends that “[t]o suggest that failure to report FOPs on a size and weight
specific basis significantly distorts the margin defies common sense given the minor
physical variations of this product.” 	See Pioneer Br. at 23–25. 	However, Pioneer does
not explain how the data it cited precluded the possibility of the margin being significantly
distorted. Similarly, although Pioneer argues that whatever distortion may have resulted
from Pioneer’s GAAP reporting would not have been “even remotely close to [the] 118.04
percent” rate, see id., Pioneer fails to demonstrate that the AFA rate applied to it was
unreasonable. 	Given the record, the court cannot agree that Commerce unreasonably
determined that Pioneer’s reported FOP data may not reflect the costs associated with
the production of subject merchandise.
Pioneer 	next 	contends 	that 	it 	lacked 	sufficient 	notice 	of 	Commerce’s
CONNUM-specific reporting requirement that the agency expressly adopted in AR3. See
Pioneer Br. at 17–19. 	However, Pioneer acknowledges that the court has, in prior
decisions, upheld Commerce’s announcement of its intent to require CONNUM-specific
reporting as providing sufficient notice for respondents to reasonably be aware of and
comply with the change in subsequent reviews. 	See Pioneer Br. at 5 (citing An Giang
Fisheries v. United States, 42 CIT ___, 287 F. Supp. 3d 1361 (2018) and Thuan An Prod.
Trading & Serv. Co. v. United States, 42 CIT ___, 348 F. Supp. 3d 1340 (2018)); see also
Decision Memorandum at 35 (relying on An Giang and Thuan An as support for
Case 1:20-cv-00116-LMG Document 22 Filed 06/09/21 Page 16 of 28
Consol. Court No. 20-00103 	Page 17
concluding respondents were on notice of CONNUM-specific reporting requirement in
underlying review). 	Given that Commerce expressly announced its CONNUM-specific
reporting requirement in AR3, and maintains CONNUM-specific reporting requirements
as part of its general AD questionnaire, the court does not agree that Commerce failed to
provide reasonable notice of its reporting requirements in this review.
Pioneer 	also 	argues 	that 	Commerce’s 	insistence 	that 	Pioneer 	report 	FOP
information on a CONNUM-specific basis violates the agency’s own regulations; however,
Pioneer only cites generally to provisions in 19 C.F.R. § 351.401(g), none of which prohibit
Commerce’s CONNUM-specific FOP reporting requirement. 	See Pioneer Br. at 15–19.
Rather, those regulatory provisions provide that the agency “may consider allocated
expenses and price adjustments when transaction-specific reporting is not feasible,
provided … that the allocation method used does not cause inaccuracies or distortions.”
19 C.F.R. § 351.401(g)(1); see also 19 C.F.R. § 351.401(g)(2) & (g)(3).
Here, Commerce provided Pioneer with multiple opportunities to report its factors
of production on a CONNUM-specific basis, and noted that even if Pioneer’s normal
books and records did not reflect this information, Pioneer could have provided an
alternative 	methodology 	to 	“reasonably 	capture 	product-specific 	consumption.”
See Decision Memorandum at 32–34. 	Commerce’s refusal to accept Pioneer’s normal
books and records as sufficient, and to excuse Pioneer’s failure “to make any attempt to
develop more accurate and specific FOPs,” did not violate 19 C.F.R. § 351.401(g).
Pioneer’s contention that Commerce “has denied respondent the opportunity to use
another allocation methodology by requiring a more specific method of reporting and
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recordkeeping,” see Pioneer Br. at 16, is not supported by the record. 	Indeed, as the
record demonstrates, Pioneer failed to even provide more than short, conclusory
statements as to why it could not comply with Commerce’s requests, much less actually
attempt to develop a methodology. 	See Decision Memorandum at 32 (“Pioneer simply
responded that it could not provide FOPs on such a basis, because it does not record
CONNUM/product-specific FOP consumption in its accounting system. In [response to]
a supplemental questionnaire, … Pioneer again summarily responded that it had ‘no cost
records that would support any other allocation methodology.’”). 	Accordingly, the court
is not persuaded by Pioneer’s argument that Commerce violated its own regulations in
applying AFA to Pioneer.
Given Commerce’s longstanding reporting requirements, of which Pioneer was or
should have been aware, as well as Commerce’s multiple requests for CONNUM-specific
FOP information and Pioneer’s refusal to develop an alternative reporting methodology,
the court sustains Commerce’s finding that Pioneer failed to cooperate and to act to the
best of its ability, thereby justifying the use of AFA.
B. Calculation of the “Sample” Rate
Xi’an 	Metals 	and 	BMD 	(“Separate 	Rate 	Plaintiffs”) 	challenge 	as 	unlawful
Commerce’s inclusion of the AFA rates assigned to two of the three mandatory
respondents in the agency’s calculation of the “sample rate” assigned to respondents who
were not individually reviewed. 	Separate Rate Plaintiffs’ legal arguments parallel those
raised in challenges to the previous administrative review and addressed in Shanxi Hairui
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Trade Co. v. United States, 45 CIT ___, 2021 WL 1291671 (Apr. 7, 2021), appeal filed,
(Fed. Cir. Jun. 4, 2021). See Xi’an Metals Br. at 5–12; BMD Br. at 4–7.
The Separate Rate Plaintiffs argue that although 19 U.S.C. § 1673d was “written
to address investigations, [Commerce], as upheld by this Court, has consistently relied
upon this section of the statute when determining separate rates in reviews.” Xi’an Metals
Br. at 5. 	Separate Rate Plaintiffs contend that, “following the plain and unambiguous
meaning” 	of 	§ 	1673d(c)(5)(A) 	and 	the 	attendant 	legislative 	history 	indicating 	the
prohibition on the inclusion of AFA rates, Commerce’s inclusion of AFA rates in the
sample rate calculation was unlawful. 5 	Id. at 5 & 9; BMD Br. at 4–6. 	Xi’an Metals
specifically argues that Commerce’s decision to rely on § 1673d in the context of
administrative reviews conducted pursuant to § 1677f-1(c)(2)(B) but not administrative
reviews conducted pursuant to § 1677f-1(c)(2)(A) interprets § 1673d “to apply to one
situation and not another, when the statute itself makes no distinction.” Xi’an Metals Br.
at 5–6; Xi’an Metals Reply at 2–4. The Separate Rate Plaintiffs cite various decisions by
this Court and the Federal Circuit in support of their position. See Xi’an Metals Br. at 9–
11; BMD Br. at 8–10 (citing, e.g., Albemarle Corp. v. United States, 821 F.3d 1345 (Fed.
Cir. 2016); Changzhou Hawd Flooring Co. v. United States, 848 F.3d 1006 (Fed. Cir.
2017); Yangzhou Bestpak Gifts & Crafts Co. v. United States, 716 F.3d 1370 (Fed. Cir.
5 While the Separate Rate Plaintiffs’ arguments reference the “plain meaning” of the
relevant statutory provisions, they acknowledge that the statute is silent as to the precise
question at issue. 	See BMD Reply at 2 (“It is undisputed that the sampling statute
(19 U.S.C. § 1677f-1(c)(2)(A)) is silent with regard to how Commerce is to calculate the
rate for non-selected companies where sampling under Subparagraph A is the method of
respondent selection.”).
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Consol. Court No. 20-00103 	Page 20
2013); Changzhou Wujin Fine Chem. Factory Co. v. United States, 701 F.3d 1367 (Fed.
Cir. 2012); Bosun Tools Co. v. United States, 44 CIT ___, 463 F. Supp. 3d 1309 (2020)).
The problem for Separate Rate Plaintiffs, however, is that none of the cited cases address
Commerce’s calculation of a sample rate under § 1677f-1(c)(2)(A).
As the court explained in Shanxi Hairui, Separate Rate Plaintiffs’ arguments about
Commerce’s reliance on § 1673d in prior administrative reviews ignores the fact that
under step two of Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837
(1984), an agency is free to change its mind and adopt another interpretation of a silence
in the statutory regime. 	Although Separate Rate Plaintiffs have demonstrated that
Commerce has previously relied upon § 1673 in calculating the separate rate in some
administrative reviews, it is undisputed that Commerce formally adopted a new policy in
2013, namely, the agency will not rely on § 1673 in administrative reviews under certain
circumstances. See Sample Methodology Notice, 78 Fed. Reg. at 65,964–65 & 65,968–
69 (explaining that Commerce would use sampling methodology under 19 U.S.C.
§ 1677f-1(c)(2)(A) for AD administrative reviews when certain conditions were met, and
Commerce would include “all rates in the sample,” including AFA rates). 	While
Commerce’s prior interpretations are relevant (including its acknowledgment that it has
routinely 	relied 	upon 	§ 	1673 	in 	administrative 	reviews 	conducted 	under
§ 1677f-1(c)(2)(B)), and do curb its discretion by requiring a reasonable explanation that
accounts for its prior approach, Commerce has provided that reasonable explanation for
its decision to not rely on § 1673 in its rate calculation for the underlying review.
See Decision 	Memorandum 	at 	8–14. 	Accordingly, 	the 	Separate 	Rate 	Plaintiffs’
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Consol. Court No. 20-00103 	Page 21
arguments contesting the legality of Commerce’s inclusion of AFA rates in the calculation
of the sample rate fail for the same reasons set forth in Shanxi Hairui.
While the analysis set forth in Shanxi Hairui explains why Commerce’s sample rate
calculation methodology is permissible, it does not completely resolve the Separate Rate
Plaintiffs’ challenge to the sample rate calculated in this action. In addition to challenging
the legality of Commerce’s rate calculation methodology, the Separate Rate Plaintiffs
here contend that Commerce acted unreasonably in applying its sampling methodology
(including the sample rate calculation) in the underlying review. See Xi’an Metals Br. at 7;
BMD 	Br. 	at 	7–11 	(“Even 	If 	Permitted 	By 	Statute, 	Commerce’s 	Approach 	Is 	Not
Reasonable and Thus Should be Reversed Under General Principles of Fairness in the
Administration of the Antidumping Law”).
Xi’an Metals highlights that in the subject review Commerce “sampled only three
respondents, two of whom received a total AFA margin.” 	See Xi’an Metals Br. at 7
(distinguishing court’s deference to Commerce’s sampling methodology in Asociacion
Colombiana de Exportadores de Flores v. United States, 13 CIT 13, 704 F. Supp. 1114
(1989), where Commerce selected 28 sample respondents). Beyond this lone critique of
Commerce’s selected sample size, however, Separate Rate Plaintiffs fail to develop any
argument 	challenging 	the 	reasonableness 	of 	Commerce’s 	selected 	sample 	size.
Commerce explained that the sample here was selected by “a stratified random PPS
[probability proportion to size] sampling procedure.” 	Decision Memorandum at 10.
Commerce found that while this review covers 212 individually-named companies, it
would not be feasible to individually examine all known producers/exporters and instead
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Consol. Court No. 20-00103 	Page 22
would conduct a review of a statistically valid sample of respondents. 	See Respondent
Selection Sampling Memo at 3–4, PD 84.
Commerce determined that it had the resources to individually examine three
respondents, from a pool of approximately 20 companies that qualified for separate rate
status. Id. at 6, 14. Commerce explained that its selection of respondents by sampling
was in accord with the factors set forth in its Sampling Methodology Notice. 	Id. at 8.
Commerce highlighted its enforcement concern that “as exporters accounting for smaller
volumes of subject merchandise become aware that they are effectively excluded from
individual examination by Commerce’s respondent selection methodology, they may
decide to lower their prices as they recognize that their pricing behavior will not affect the
AD 	rates 	assigned 	to 	them.” 	Decision 	Memorandum 	at 	9 	(citing 	the 	Sampling
Methodology Notice). 	Commerce also noted that its decision to use sampling was
bolstered by the ninth administrative review, where “the pattern of non-participation
continued with one respondent failing to participate after being selected using the
sampling method.” 	Id. at 10. While the Separate Rate Plaintiffs may decry the number
of 	companies 	that 	Commerce 	determined 	to 	individually 	examine, 	they 	failed 	to
demonstrate that Commerce’s decision to select only three individual respondents was
unreasonable.
In fact, Commerce’s decision to use sampling was prompted by Defendant-
Intervenor Mid Continent Steel & Wire, Inc.’s (“Mid Continent”) request, as Mid Continent
detailed “the history of separate rate companies’ exploitation of Commerce’s reliance
upon 19 U.S.C. § 1677f-1(c)(2)(B) by requesting their own reviews and obtaining separate
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Consol. Court No. 20-00103 	Page 23
rate status with the goal of free-riding on the historically low margin associated with the
largest exporter reviewed (Stanley) and with no real intention of being examined, and
when they are selected for individual examination, they refuse to participate, initially
participate but cease participating at a point when it is simply too late for Commerce to
select a replacement respondent, or, if they complete the review, are found not to be
eligible for a separate rate, or receive a very high calculated margin or AFA margin).”
Def.-Intervenor’s Resp. at 16 (citing Mid Continent’s Request for Sampling at 6–18,
PD 58). 	Defendant-Intervenor 	further 	notes 	that 	“this 	pattern 	of 	non-participation
continued even in the administrative review on appeal. When Universal was selected as
one of the mandatory respondents, despite submitting a separate rate certification
(just as Xi’an and the separate rate respondents from whom BMD imported subject nails
did), and ‘cooperating’ as far as submitting materials to establish their separate rate status
(as Xi’an and BMD claimed in their opening briefs), it failed to respond to the antidumping
questionnaire issued by Commerce and was assigned an AFA rate.” 	Def.-Intervenor’s
Resp. at 17 (citing Decision Memorandum at 13). 	Given the record and Commerce’s
reasonable explanation for its sampling methodology applied in this review, the court
cannot conclude that Commerce acted unreasonably in deciding to sample only three
companies as the basis for calculating the sample rate.
In the context of their overall challenge, the Separate Rate Plaintiffs portray
themselves as “cooperative.” 	See, e.g., Xi’an Metals Br. at 7–8; BMD Br. at 10–11.
Commerce, however, expressed concerns regarding potential rate manipulation by
“cooperative” separate rate respondents that have no intention of complying if selected
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Consol. Court No. 20-00103 	Page 24
for individual investigation, and thus determined that inclusion of AFA rates in the sample
rate calculation was appropriate. 	Notably, the court previously sustained Commerce’s
inclusion of individually calculated AFA rates in the sample rate, concluding that
Commerce’s reliance on a random sampling methodology eliminates the threat of
improper application of AFA to “cooperative” respondents. 	See Laizhou Auto Brake
Equip. Co. v. United States, 32 CIT 711, 724 (2008) (“It is important to note that
Commerce is not cherry picking here, nor is there anything arbitrary about the way it is
constructing this sample ….This Court therefore need not address Plaintiffs’ contention
that Commerce's approach ‘punishes fully cooperative parties by assigning them a rate
unfairly inflated by the non-cooperation of [another] party,’ as this is more a moral
argument than a legal one.”). 	As Commerce explained here, “[b]ecause Commerce is
constructing a sample that is intended to be representative of the population as a whole,
it has included all the observations in the sample rate, including the AFA rates.
Disregarding these actual observations would be contrary to the very principle of random
sampling and would invalidate the sample since the sample is supposed to be indicative
of the population as a whole.” 	Decision Memorandum at 13. 	While the Separate Rate
Plaintiffs seek to discredit the rationale in Laizhou as effectively overruled by subsequent
precedent, the court is not persuaded. Separate Rate Plaintiffs’ reliance on those cases
is misplaced, as they arose outside of the sampling context.
The Separate Rate Plaintiffs also argue that the sample rate assigned by
Commerce is not reasonably reflective of respondents’ potential dumping margins. See
BMD Br. at 7–10; Xi’an Metals Br. at 12–15. In their view, although the inclusion of AFA
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Consol. Court No. 20-00103 	Page 25
rates may be necessary to preserve the validity of the sample, Commerce’s rate
calculation must still be supported by substantial evidence confirming that the resultant
sample rate is reflective of the economic reality. See Albemarle, 821 F.3d at 1354 (citing
Bestpak for the proposition that “accuracy and fairness must be Commerce's primary
objectives in calculating a separate rate for cooperating exporters”); Bestpak, 716 F.3d at
1379–80 (“rate determinations for nonmandatory, cooperating separate rate respondents
must also bear some relationship to their actual dumping margins”); Bosun Tools, 44 CIT
at ___, 463 F. Supp. 3d at 1318 (“It does not stand to reason that the statutory directive
not to consider ‘commercial reality’ in the AFA context obviated the fairness and accuracy
concerns 	identified 	by 	Bestpak 	when 	applying 	a 	separate 	statutory 	provision 	to
cooperative respondents.”). 	Specifically, Xi’an Metals argues that “[i]n sum, a margin
used to deter non-cooperating mandatory respondents that is demonstratively higher than
the history of dumping in the Order generally, is not reasonably reflective of the dumping
margin of cooperating separate rate companies.” Xi’an Metals Reply at 9. Xi’an Metals
further 	notes 	that 	as 	it 	previously 	fully 	cooperated 	with 	Commerce’s 	individual
investigation during the fifth administrative review, Commerce’s application of AFA in this
administrative review is particularly unrepresentative. See Xi’an Metals Br. at 13–14.
Unfortunately, Separate Rate Plaintiffs have not identified anything in the record
showing 	that 	the 	sample 	rate 	calculated 	using 	Stanley’s 	calculated 	margin 	and
Universal’s and Pioneer’s AFA rates is not accurate or does not bear a reasonable
relationship to their actual dumping margins. 	Instead, Separate Rate Plaintiffs rely
primarily on the precedent previously addressed and distinguished in this opinion.
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Consol. Court No. 20-00103 	Page 26
See supra at 19–20 (distinguishing cases listed in BMD Br. at 7–10 & Xi’an Metals Br.
at 12–14).
Here, BMD argues that “Commerce’s application of an all others rate based on
total AFA is especially unreasonable given that the only calculated rate (for Stanley) in
this review is an extremely low 2.11%” compared to the all-others rate assigned to non-
investigated respondents of 41.75%. 	See BMD Br. at 10–11. 	Separate Rate Plaintiffs
note that although Commerce justifies “the high all others rate in this review by claiming
that the average calculated rates for companies other than Stanley over the course of the
last nine reviews is 57%,” the only respondent “that has fully cooperated in all segments
of these past nine reviews and its rate has decreased over time” from 11.95% in the sixth
review to 2.11% in the tenth review. Xi’an Metals Br. at 14; BMD Br. at 11.
Separate Rate Plaintiffs’ arguments that their rates should be similar to that of
Stanley ignore Commerce’s findings in the previous administrative reviews that the
separate rate respondents’ dumping behavior was different than that of Stanley. In fact,
Commerce’s finding in this review that separate rate respondents engaged in distinctly
different dumping than Stanley was a key basis for Commerce’s decision to select
respondents by sampling in the first place. See Respondent Selection Sampling Memo
at 2 (“Given the large disparity between Stanley’s calculated margins and the margins
assigned to the other respondents in the past nine administrative reviews, we find that
[there is a reasonable basis to believe or suspect that the average export prices and/or
dumping margins for Stanley differ from such information that would be associated with
the remaining exporters.]”). 	Accordingly, the court is not persuaded by Separate Rate
Case 1:20-cv-00116-LMG Document 22 Filed 06/09/21 Page 26 of 28
Consol. Court No. 20-00103 	Page 27
Plaintiffs that Commerce acted unreasonably in calculating a sample rate that exceeded
the individual rate assigned to Stanley.
Separate Rate Plaintiffs’ reliance on Bosun Tools is misplaced for the same
reason. 	See BMD Br. at 9. 	In Bosun Tools, the court held that Commerce’s separate
rate calculation under the “expected method” of § 1673d(c)(5)(B) was unreasonable
because Commerce failed “to address evidence which detracts from its determination.”
44 CIT at ___, 463 F. Supp. 3d at 1318. Specifically, the court observed that the separate
rate respondents in that matter had “put forth evidence that the expected method would
result in an unreasonable rate.” 	Id. (citing Separate Rate Plaintiffs’ brief explaining that
“‘there is a history of low calculated dumping margins,’ including margins assigned to
Bosun following individual examination”). Here, however, Separate Rate Plaintiffs have
not demonstrated that Commerce failed to consider anything that challenges the
reasonableness of the 41.75% sample rate. In response to Commerce’s finding that the
sample rate calculated was reasonable as the “average calculated rates for companies’
other than Stanley over the course of the last nine reviews is 57%,” Separate Rate
Plaintiffs continue to focus on Stanley’s low rate, which declined over the course of prior
administrative reviews, and insist that Stanley’s rate and cooperation should detract from
the reasonableness of a high sample rate calculation. See Xi’an Metals Br. at 14 (citing
Decision Memorandum at 10); BMD Br. at 11. 	Again, Separate Rate Plaintiffs ignore
Commerce’s findings here that the separate rate respondents’ dumping behavior was
different than that of Stanley. 	For the reasons provided, Separate Rate Plaintiffs have
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Consol. Court No. 20-00103 	Page 28
not persuaded the court that Commerce’s sample rate calculation was unreasonably high
and not reflective of separate rate respondents’ dumping margins.
III. Conclusion
For the foregoing reasons, the court sustains the Final Results. Judgment will be
entered accordingly.
/s/ Leo M. Gordon
Judge Leo M. Gordon
Dated: June 9, 2021
New York, New York
Case 1:20-cv-00116-LMG Document 22 Filed 06/09/21 Page 28 of 28

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