Fengchi Imp. and Exp. Co., Ltd. of Haicheng City et al v. United States

Slip Op. 15-86
UNITED STATES COURT OF INTERNATIONAL TRADE
________________________________
FENGCHI IMP. & EXP. CO., LTD. 	:
OF HAICHENG CITY, FENGCHI 	:
REFRACTORIES CO. OF HAICHENG 	:
CITY, and FEDMET RESOURCES 	:
CORPORATION, 	:
:
Plaintiffs, 	: 	Before: Nicholas Tsoucalas,
: 	Senior Judge
v. 	:
: 	Court No.: 13-00186
UNITED STATES, 	:
:
Defendant, 	:
:
and 	:
:
RESCO PRODUCTS, INC., and 	:
ANH REFRACTORIES COMPANY, 	:
:
Defendant-Intervenors.:
OPINION
[Commerce’s Remand Results are sustained.]
Dated:August 13, 2015
Donald 	B. 	Cameron, 	Brady 	W. 	Mills, 	Julie 	C. 	Mendoza, 	Mary 	S.
Hodgins, R. Will Planert, and Sarah S. Sprinkle, Morris Manning &
Martin LLP, of Washington, DC, for plaintiffs.
Melissa 	M. 	Devine, 	Trial 	Attorney, 	Commercial 	Litigation 	Branch,
Civil Division, U.S. Department of Justice, of Washington, DC, for
defendant. 	With her on the brief were Benjamin C. Mizer, Principal
Deputy 	Assistant 	Attorney 	General, 	Jeanne 	E. 	Davidson, 	Director,
and 	Patricia 	M. 	McCarthy, 	Assistant 	Director. 	Of 	counsel 	on 	the
brief was Whitney M. Rolig, Attorney, Office of the Chief Counsel
for 	Trade 	Enforcement 	& 	Compliance, 	U.S. 	Department 	of 	Commerce,
of Washington, DC.
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Joseph 	W. 	Dorn, 	J. 	Michael 	Taylor, 	and 	Brian 	E. 	McGill, 	King 	&
Spalding 	LLP, 	of 	Washington, 	DC, 	for 	defendant-intervenor 	Resco
Products, 	Inc. 	and 	Harbison 	Walker 	International 	(formerly 	ANH
Refractories Company.
Tsoucalas, 	Senior 	Judge: 	before 	the 	court 	are 	the
Department 	of 	Commerce’s 	(“Commerce”) 	Final 	Results 	of
Redetermination 	pursuant 	to 	Court 	Remand 	in 	Fengchi 	Imp. 	& 	Exp.
Co., 	Ltd. 	of 	Haicheng 	City 	v. 	United 	States, 	39 	CIT 	__, 	__, 	Slip
Op. 	15-23 	(Mar. 	25, 	2015) 	(“Fengchi 	I”). 	See 	Final 	Results 	of
Redetermination 	Pursuant 	to Fengchi 	Imp. 	& 	Exp. 	Co., 	Ltd. 	of
Haicheng City v. United States, ECF No. 111 (May 26, 2015) (“Remand
Results”). 	The relevant facts and procedural history are set forth
in Fengchi I. 	Familiarity with the court’s decision in Fengchi I
is presumed.
Plaintiffs, 	Fengchi 	Import 	and 	Export 	Co., 	Ltd. 	of
Haicheng City, Fengchi Refractories Co. of Haicheng City and Fedmet
Resources 	Corporation 	(collectively, 	“Plaintiffs”), 	challenge
Commerce’s 	redetermination. 	See 	Pls.’ 	Cmts. 	on 	Remand 	Results,
ECF 	No. 	114 	(June 	25, 	2015) 	(“Pls.’ 	Br.”). 	Both 	Commerce 	and
Defendant-Intervenors Resco Products, Inc. ("Resco") and Harbison
Walker 	International, 	formerly 	ANH 	Refractories 	Company 	("ANH")
insist that the court sustain the Remand Results. 	See Def.'s Resp.
to 	Cmts. 	on 	Remand 	Results, 	ECF 	No. 	118 	(July 	10, 	2015) 	(“Def.’s
Br.”); Def.- Intervenors’s Cmts. Response to Pls.’ Cmts. on Remand
Results, ECF No. 120 (July 10, 2015) (“Def.-Int.’s Br.”).
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JURISDICTION and STANDARD OF REVIEW
The 	Court 	has 	jurisdiction 	pursuant 	to 	28 	U.S.C. 	§
1581(c) (2012) and section 516A(a)(2)(B)(iii) of the Tariff Act of
1930,1 	as 	amended, 	19 	U.S.C. 	§ 	1516a(a)(2)(B)(iii) 	(2012). 	The
court will uphold Commerce’s final determination in an antidumping
duty 	administrative 	review 	unless 	it 	is 	“unsupported 	by
substantial evidence on the record, or otherwise not in accordance
with 	law.” 	19 	U.S.C. 	§ 	1516a(b)(1)(B)(i). 	Substantial 	evidence
“means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” 	Universal Camera Corp. v. NLRB,
340 U.S. 474, 477 (1951).
Additionally, when reviewing an agency’s interpretation
of 	its 	regulations, 	the 	court 	must 	give 	substantial 	deference 	to
the 	agency’s 	interpretation, 	Michaels 	Stores, 	Inc. 	v. 	United
States, 	766 	F.3d 	1388, 	1391 	(Fed. 	Cir. 	2014) 	(citing 	Torrington
Co. 	v. 	United 	States, 	156 	F.3d 	1361, 	1363-64 	(Fed. 	Cir. 	1998)),
according 	it 	“‘controlling 	weight 	unless 	it 	is 	plainly 	erroneous
or 	inconsistent 	with 	the 	regulation.’” 	Thomas 	Jefferson 	Univ. 	v.
Shalala, 	512 	U.S. 	504, 	512, 	(1994) 	(citations 	omitted); 	accord
Viraj Group v. United States, 476 F.3d 1349, 1355 (Fed. Cir. 2007).
In this context, “[d]eference to an agency’s interpretation of its
1 Further citations to the Tariff 	Act of 1930 are 	to the relevant
portions 	of 	Title 	19 	of 	the 	U.S. 	Code, 	2006 	edition, 	and 	all
applicable amendments thereto.
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own 	regulations 	is 	broader 	than 	deference 	to 	the 	agency’s
construction 	of 	a 	statute, 	because 	in 	the 	latter 	case 	the 	agency
is 	addressing 	Congress’s 	intentions, 	while 	in 	the 	former 	it 	is
addressing 	its 	own.” 	Viraj, 	476 	F.3d 	at 	1355 	(quoting 	Gose 	v.
U.S. Postal Serv., 451 F.3d 831, 837 (Fed. Cir. 2006).
Discussion
In 	the 	underlying 	administrative 	review 	of 	the
antidumping order on certain magnesia carbon bricks (“MCBs”) from
China, Commerce applied a total adverse facts available (“AFA”) to
Fengchi 	as 	a 	consequence 	of 	Fengchi’s 	refusal 	to 	respond 	to
Commerce’s 	request 	for 	certain 	sales 	information. 	See 	Certain
Magnesia Carbon Bricks From the People’s Republic of China: Final
Results 	and 	Final 	Partial 	Rescission 	of 	Antidumping 	Duty
Administrative 	Review; 	2010–2011, 	78 	Fed. 	Reg. 	22,230 	(Apr. 	15,
2013) (“Final Results”); see also Certain MCBs from the PRC: Issues
and 	Decision 	Memorandum 	for 	the 	Final 	Results 	of 	the 	2010–2011
Administrative 	Review, 	(Apr. 	9, 	2013) 	PR 	148 	at 	1–2 	(“IDM”).
Commerce 	assigned 	Fengchi 	a 	weighted-average 	dumping 	margin 	of
236% based on the petition rate from the investigation. 	See First
Administrative 	Review 	of 	MCBs 	from 	the 	PRC: 	Corroboration
Memorandum 	(Oct. 	1, 	2012), 	CR 	68 	at 	2–3 	(unchanged 	in 	final).
Commerce 	found 	that 	the 	petition 	rate 	was 	reliable 	because 	it
calculated the 236% figure as the AFA rate for the PRC-wide entity
during the investigation, which it then corroborated using model-
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specific 	margins 	of 	a 	cooperating 	respondent. 	See 	id. 	Commerce
determined that the rate was relevant to Fengchi by comparing the
United 	States 	price 	from 	the 	petition 	to 	the 	average 	unit 	prices
for five Fengchi sales of magnesia alumina carbon bricks (“MACBs”)
that were identified by United States Customs and Border Protection
(“CBP”). 	Id. 	at 	3. 	Specifically, 	Commerce 	found 	that 	the 	U.S.
sales 	price 	from 	the 	petition 	rate 	was 	within 	the 	range 	of 	the
average 	unit 	values 	for 	Fengchi’s 	entries. 	Id. 	Additionally,
Commerce found that the usage rates for the factors of production
in 	the 	petition 	were 	within 	the 	range 	of 	values 	of 	Fengchi’s
reported usage rates. 	Id. 	Because the rate was both reliable and
relevant 	to 	Fengchi, 	Commerce 	found 	that 	it 	adequately
corroborated the petition rate of 236%. 	Id.
In 	Fengchi 	I, 	the 	Court 	remanded 	the 	Final 	Results 	to
Commerce 	for 	further 	explanation 	regarding 	the 	corroboration 	of
the 	AFA 	rate. 	Fengchi 	I, 	39 	CIT 	at 	__, 	Slip 	Op. 	15-23 	at 	18–22.
Although the Court determined that Commerce properly relied on AFA
in 	assigning 	Fengchi’s 	weighted-average 	dumping 	margin, 	as 	a
consequence 	of 	the 	Federal 	Circuit’s 	holding 	in 	Fedmet 	Resources
Corp. v. United States, 755 F.3d. 912, (Fed. Cir. 2014), the court
became “concerned with Commerce’s potentially unreasonable use of
out of scope MACB sales to corroborate the AFA rate.” 	Id. at __,
Slip 	Op. 	15-23 	at 	21–22. 	Therefore, 	the 	court 	remanded 	so 	that
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Commerce could have the opportunity to address this concern at the
administrative level. 	Id.
Commerce resolved these concerns in its Remand Results.
There, 	Commerce 	reasonably 	explained 	that 	the 	Federal 	Circuit’s
ruling 	in 	Fedmet 	“only 	affects 	[Commerce’s] 	corroboration 	of 	the
AFA 	rate 	assigned 	to 	Fengchi 	to 	the 	extent 	that 	the 	record
demonstrates 	that 	the 	entries 	underlying 	[Commerce’s]
corroboration 	analysis 	were 	actually 	non-subject 	MACBs.” 	Remand
Results at 5. 	Commerce found that Fengchi’s refusal to cooperate
with the review precluded it from identifying the exact nature of
those entries. 	Id. 	Specifically, Commerce examined the CBP entry
documentation 	for 	the 	five 	sales 	at 	issue 	and 	found 	that 	the
documentation 	described 	the 	merchandise 	as 	MACBs, 	but 	did 	not
contain any additional details regarding the merchandise’s alumina
content, 	which 	is 	necessary 	to 	distinguish 	MACBs 	from 	MCBs. 	Id.
at 5-6; see also Fedmet Res. Corp. v. United States, 755 F.3d 912,
924 (Fed. Cir. 2014). 	According to Commerce, nothing in this data
indicated whether Fengchi’s merchandise was actually out-of-scope
as outlined in Fedmet. 	Since Fengchi refused to provide Commerce
with 	any 	narrative 	clarifying 	the 	merchandise 	in 	question,
Commerce 	reasonably 	found 	that 	the 	entry 	documentation 	was
ambiguous 	as 	to 	the 	product 	actually 	sold. 	Id. 	at 	6.
Consequently, Commerce reasonably concluded that the five entries
used to corroborate the AFA rate were subject merchandise. Id.
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Commerce 	also 	examined 	additional 	record 	evidence
regarding 	other 	sales 	that 	CBP 	identified 	as 	subject 	merchandise
that 	Fengchi 	did 	not 	report 	for 	the 	period 	of 	review. 	Id. 	at 	7
(citing 	First 	Antidumping 	Administrative 	Review 	of 	Certain 	MCBs
from 	the 	PRC: 	Sections 	C 	and 	D 	Supplemental 	Questionnaire, 	(Aug.
3, 	2012) 	CR 	46 	at 	Attach. 	II). 	Once 	again, 	Fengchi 	chose 	not 	to
comment on these sales, limiting the record to only the prices and
quantities of imports that were classified as subject merchandise
by 	CBP. 	Id. 	at 	7. 	Therefore, 	Commerce 	reasonably 	inferred 	that
the 	sales 	were 	subject 	merchandise 	and 	found 	that, 	as 	with 	the
other 	five 	CBP 	entries 	in 	question, 	the 	United 	States 	price 	from
the petition was “within the range of the average unit prices for
the 	remaining 	unreported 	sales 	and 	[was] 	therefore 	relevant 	to
Fengchi for this period of review.” Id. at 7.
When 	selecting 	an 	AFA 	rate, 	Commerce 	may 	rely 	on
information 	from 	the 	petition, 	investigations, 	prior
administrative 	reviews, 	or 	“any 	other 	information 	placed 	on 	the
record.” 	19 	U.S.C. 	§ 	1677e(b). 	However, 	Commerce 	cannot 	select
any rate as the AFA rate, but rather, must select an AFA rate that
is “a reasonably accurate estimate of the respondent's actual rate,
albeit with some built-in increase intended as a deterrent to non-
compliance.” 	F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v.
United 	States, 	216 	F.3d 	1027, 	1032 	(Fed. 	Cir. 	2000). 	“Commerce
must 	select 	secondary 	information 	that 	has 	some 	grounding 	in
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commercial 	reality.” 	Gallant 	Ocean 	(Thailand) 	Co. 	v. 	United
States, 	602 	F.3d 	1319, 	1324 	(Fed. 	Cir. 	2010). 	Although 	a 	higher
AFA rate creates a stronger incentive to cooperate, “Commerce may
not 	select 	unreasonably 	high 	rates 	having 	no 	relationship 	to 	the
respondent’s actual dumping margin.” 	Id. at 1323 (citing De Cecco,
216 F.3d at 1032).
The 	requirements 	articulated 	by 	the 	CAFC 	are 	an
extension 	of 	the 	statute’s 	corroboration 	requirement. 	See 	De
Cecco, 216 F.3d at 1032. 	Under 19 U.S.C. § 1677e(c), when Commerce
relies 	on 	secondary 	information, 	it 	“shall, 	to 	the 	extent
practicable, corroborate that information from independent sources
that are reasonably at [its] disposal.” 	19 U.S.C. § 1677e(c). 	To
corroborate secondary information, Commerce must find that it has
“probative 	value.” 	See 	KYD, 	Inc. 	v. 	United 	States, 	607 	F.3d 	760,
765 (Fed. Cir. 2010). 	Secondary information has “probative value”
if it is “reliable” and “relevant” to the respondent. 	Mittal Steel
Galati 	S.A. 	v. 	United 	States, 	31 	CIT 	730, 	734, 	491 	F. 	Supp. 	2d
1273, 1278 (2007); see KYD, 607 F.3d at 765–67.
Plaintiffs 	argue 	that 	Fedmet 	renders 	the 	AFA 	rate
unreasonable because Commerce corroborated it using sales of non-
subject MACBs. 	Pls.’ Br. at 2–3. 	Plaintiffs insist that Commerce
is required to identify evidence on the record that the entries it
relies 	upon 	for 	the 	corroboration 	of 	an 	AFA 	rate 	are 	subject
merchandise. 	Id. 	at 	3 	(citing 	Foshan 	Shunde 	Yongjian 	Housewares
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& 	Hardware 	Co. 	v. 	United 	States, 	37 	CIT 	__, 	__, 	Slip 	Op. 	13-47
(Apr. 	8, 	2013)). 	Additionally, 	Plaintiffs 	contend 	that 	although
Commerce 	had 	previously 	requested 	that 	Fengchi 	respond 	to 	its
antidumping 	duty 	questionnaire 	with 	respect 	to 	Fengchi’s 	exports
of 	MACBs, 	“Commerce 	never 	asked 	Fengchi 	for 	any 	additional
information 	specifically 	regarding 	the 	CBP 	entry 	data, 	including
the 	entries 	underlying 	the 	corroboration 	analysis.” 	Id. 	at 	4.
Finally, Plaintiffs contend that Commerce erroneously continues to
rely 	on 	the 	same 	“post 	hoc 	rationalizations” 	it 	offered 	prior 	to
the 	court’s 	remand 	in 	Fengchi 	I 	as 	justification 	for 	its
corroboration 	of 	the 	AFA 	rate, 	instead 	of 	reviewing 	the 	evidence
on the record. 	Id. at 7–8.
Plaintiffs’ 	arguments 	are 	unpersuasive. 	Commerce 	is
required 	to 	corroborate 	information 	only 	“to 	the 	extent
practicable” 	on 	a 	given 	record. 	19 	U.S.C. 	§ 	1677e(c). 	On 	this
record, 	Fengchi 	identifies 	no 	evidence 	indicating 	whether 	the
alumina content of its merchandise falls within the range of out-
of-scope 	MACBs 	described 	in 	Fedmet. 	See 	Fedmet 	Res. 	Corp. 	v.
United 	States, 	755 	F.3d 	912, 	924 	(Fed. 	Cir. 	2014). 	As 	Commerce
reasonably 	observed, 	Fedmet 	“only 	affects 	[Commerce’s]
corroboration 	of 	the 	AFA 	rate 	assigned 	to 	Fengchi 	to 	the 	extent
that 	the 	record 	demonstrates 	that 	the 	entries 	underlying
[Commerce’s] 	corroboration 	analysis 	were 	actually 	non-subject
MACBs.” 	Remand Results at 5 (emphasis added). 	Therefore, at best,
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the 	record 	is 	ambiguous, 	and 	allows 	for 	more 	than 	one 	reasonable
answer to that predicate question.
Moreover, 	it 	appears 	that 	Plaintiffs 	would 	prefer 	that
Commerce 	do 	all 	the 	work 	in 	establishing 	whether 	the 	entries 	in
question 	were 	or 	were 	not 	MACBs, 	that 	is 	not 	Commerce’s 	role.
Commerce’s 	inability 	to 	mandate 	participation 	in 	its 	proceedings
means that interested parties bear the primary burden of developing
the administrative record. 	See QVD Food Co. v. United States, 658
F.3d 	1318, 	1325 	(Fed. 	Cir. 	2011). 	Here, 	rather 	than 	provide 	any
information about its merchandise, Fengchi left it to Commerce to
assemble 	a 	record 	which 	it 	now 	complains 	results 	in 	a 	less
favorable 	outcome. 	The 	fact 	of 	the 	matter 	is 	that 	Fengchi
identifies 	no 	evidence 	on 	this 	record 	that 	undermines 	the
reasonableness of Commerce’s corroboration. 	Once again, Commerce
is 	only 	required 	to 	corroborate 	the 	AFA 	rate 	“to 	the 	extent
practicable” on a given record. 	19 U.S.C. § 1677e(c).
Furthermore, 	Plaintiffs 	mistakenly 	characterize
Commerce’s 	comments 	in 	its 	redetermination 	as 	being 	a 	“post 	hoc
rationalization.” 	Pls.’ 	Br. 	at 	7–8. 	Commerce 	developed 	its
comments 	in 	the 	redetermination 	over 	the 	course 	of 	the 	remand
proceedings 	as 	the 	court 	directed 	in 	Fengchi 	I. 	The 	remand
proceeding 	is 	an 	administrative 	proceeding, 	meaning 	that
Commerce’s 	comments 	are 	not 	the 	post 	hoc 	rationalization 	of 	its
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counsel. 	See 	Mitsubishi 	Heavy 	Indus. 	v. 	United 	States, 	24 	CIT
275, 287 n. 9, 97 F. Supp. 2d 1203, 1209 n.9 (2000).
Accordingly, 	since 	Plaintiffs 	chose 	not 	to 	comply 	with
Commerce’s 	request 	for 	information, 	Commerce 	reasonably 	selected
from the list of secondary sources as the basis for Fengchi’s AFA
rate. 	See 	19 	U.S.C. 	§ 	1677e(b). 	The 	court 	finds 	that 	Commerce
acted reasonably when it chose to rely on the limited data on the
record 	to 	select 	an 	AFA 	rate 	that 	was 	“a 	reasonably 	accurate
estimate of the respondent's actual rate, albeit with some built-
in increase intended as a deterrent to non-compliance.” 	De Cecco,
216 F.3d at 1032.
For the foregoing reasons, Commerce’s Remand Results are
SUSTAINED. Judgment will be entered accordingly.
/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated: __________________
New York, New York
August 13, 2015
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