New American Keg v. United States

1:20-cv-00008Cit30 de mar. de 2021

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Slip Op. 21-30
UNITED STATES
COURT OF INTERNATIONAL TRADE
Court No. 20-00008
NEW AMERICAN KEG, d/b/a
AMERICAN KEG COMPANY,
Plaintiff,
v.
UNITED STATES,
Defendant,
and
NINGBO MASTER INTERNATIONAL
TRADE CO., LTD., AND GUANGZHOU
JINGYE MACHINERY CO, LTD,
Defendant-Intervenors.
Before: M. Miller Baker, Judge
OPINION AND ORDER
[Plaintiff’s motion for judgment on the agency record
is granted in part and denied in part.]
Dated: March 23, 2021
Whitney M. Rolig, Andrew W. Kentz, and Nathaniel
Maandig Rickard, Picard Kentz & Rowe LLP of Wash-
ington, DC, on the briefs for Plaintiff.
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Ashley Akers, Trial Attorney, Commercial Litigation
Branch, Ethan P. Davis, Acting Assistant Attorney
General, Jeanne P. Davidson, Director, and Patricia
M. McCarthy, Assistant Director, Civil Division, U.S.
Department of Justice of Washington, DC, on the brief
for Defendant. Of counsel on the brief was Vania
Wang, Attorney, Office of the Chief Counsel for Trade
Enforcement & Compliance, U.S. Department of Com-
merce of Washington, DC.
Gregory S. Menegaz, J. Kevin Horgan, and Alexandra
H. Salzman, deKieffer & Horgan, PLLC, of Washing-
ton, DC, on the brief for Defendant-Intervenors.
Baker, Judge: Last week, the nation and much of
the world celebrated St. Patrick’s Day. Some of those
celebrations involved green beer, often tapped from
steel kegs. This case is about steel kegs (but without
the green beer).
After an investigation, the Commerce Department
recently determined that imported Chinese beer kegs
were being dumped in the U.S., i.e., sold within the
U.S. at below what would be the normal sales price if
China had a market economy. Based on that determi-
nation, Commerce imposed a hefty antidumping duty
on Chinese kegs in general but exempted one major
Chinese exporter that was individually investigated
and two smaller exporters.
As to the major exporter that Commerce investi-
gated, a domestic keg manufacturer objected that the
Department’s errors in calculating labor costs and ver-
ifying 	information 	allowed 	the 	exporter 	to 	escape
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antidumping duties. As to the two smaller exporters,
the domestic manufacturer objected to Commerce’s de-
termination that they were free from Chinese govern-
ment control and therefore could enjoy whatever anti-
dumping rate Commerce assigned to the investigated
major exporter.
Commerce denied those objections. The domestic
manufacturer then brought this action challenging
Commerce’s decision, prompting the investigated Chi-
nese exporter and one of the smaller exporters to in-
tervene as defendants. After full briefing on the do-
mestic manufacturer’s motion for judgment on the
agency record, the Court now grants the motion as to
the investigated exporter’s labor costs and verification
issues. As to the issue of the two smaller exporters’ el-
igibility for a separate rate, the Court grants the do-
mestic manufacturer’s motion as to one but denies it
as to the other. Finally, the Court remands for further
proceedings consistent with this opinion.
Statutory and Regulatory Background
A. Antidumping orders generally
1. Commerce and ITC investigations
The federal antidumping statute provides a mech-
anism for imposing remedial duties on merchandise
sold, or likely to be sold, in the United States at “less
than its fair value.” 19 U.S.C. § 1673(1). That mecha-
nism allows an “interested party,” as defined in the
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Tariff Act of 1930, 1 to file a petition with Commerce
and the International Trade Commission alleging that
a 	U.S. 	domestic 	industry 	is 	materially 	injured 	or
threatened with material injury by imports that are
being, or are likely to be, sold in the U.S. at less than
fair value. U.S. Int’l Trade Comm’n, Publication 4540,
Antidumping and Countervailing Duty Handbook at
I-3 	(14th 	ed. 	June 	2015), 	available 	at
https://www.usitc.gov/trade_remedy/documents/handbook.pdf
(accessed Mar. 22, 2021).
Commerce then investigates whether the petition
contains sufficient allegations of dumping and, if so,
whether dumping is occurring, while the ITC investi-
gates whether the relevant domestic industry is being,
or is likely to be, materially injured. If both agencies
find in the affirmative, Commerce publishes an anti-
dumping order in the Federal Register imposing an
antidumping duty “in an amount equal to the amount
by which the normal value exceeds the export price (or
the constructed export price) for the merchandise.”
19 U.S.C. § 1673. 2 The antidumping duty is in addition
1 The statute provides that an “interested party” described
in subparagraph (C), (D), (E), (F), or (G) of Section 771(9)
of that Act (codified at 19 U.S.C. § 1677(9)) may file a peti-
tion 	on 	behalf 	of 	a 	domestic 	industry. 	See 	19 	U.S.C.
§ 1673a(b)(1). The specified subparagraphs refer to various
domestic entities involved in the production of a “domestic
like product.” Id. § 1677(9)(C)–(G).
2 “Normal value” essentially refers to the price at which the
subject merchandise is sold in the country from which it is
exported. RHP Bearings Ltd. v. United States, 288 F.3d
1334, 1337 (Fed. Cir. 2002). For example, the normal value
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to any other duty imposed on the subject merchandise.
Id.
2. Selection of respondents
In theory, the goal of an antidumping investigation
is to determine the extent to which every individual
foreign exporter’s U.S. selling price for the subject
merchandise is lower than its “normal value,” as re-
quired by statute: “In determining weighted average
dumping margins . . . , [Commerce] shall determine
the individual weighted average dumping margin for
each known exporter and producer of the subject mer-
chandise.” 19 U.S.C. § 1677f-1(c)(1). The goal is theo-
retical because the statute then sets forth an exception
to the general rule when there are numerous export-
ers.
For such cases where “it is not practicable to make
individual weighted average dumping margin deter-
minations . . . because of the large number of exporters
or producers involved in the investigation,” Commerce
may determine margins “for a reasonable number of
exporters or producers” by limiting its investigation to
either a statistically valid sample of exporters or pro-
ducers or “exporters and producers accounting for the
largest volume of the subject merchandise from the ex-
porting country that can be reasonably examined.” Id.
§ 1677f-1(c)(2).
of a widget exported from Country Q is the price at which
that widget is sold in Country Q.
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When Commerce invokes the statutory exception, it
selects “mandatory respondents” for individual exam-
ination. As the term implies, mandatory respondents
are required to respond to Commerce’s information re-
quests during an investigation. Commerce determines
individual antidumping rates for the mandatory re-
spondents, 19 U.S.C. § 1673d(c)(1)(B)(i)(I). 3
3. Verification
A critical aspect of Commerce’s antidumping inves-
tigation involves “verification” of mandatory respond-
ents. The statute provides that Commerce “shall verify
all information relied upon in making . . . a final deter-
mination in an investigation.” 19 U.S.C. § 1677m(i)(1).
Commerce’s implementing regulations provide that
the Department will visit (1) producers, exporters, or
importers; (2) their affiliates; or (3) unaffiliated pur-
chasers “in order to verify the accuracy and complete-
ness of submitted factual information” and that the
personnel making such visits “will request access to all
files, records, and personnel which the Secretary con-
siders 	relevant 	to 	factual 	information 	submitted.”
19 C.F.R. § 351.307(d)(1)–(3).
3 As to exporters and producers not individually investi-
gated, Commerce determines an “all-others rate” to apply.
See 19 U.S.C. § 1673d(c)(1)(B)(i)(II). The “all-others rate” is
to be “an amount equal to the weighted average of the esti-
mated weighted average dumping margins established for
exporters 	and 	producers 	individually 	investigated,” 	id.
§ 1673d(c)(5)(A), subject to certain exceptions not relevant
here.
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“Verification is like an audit, the purpose of which
is to test information provided by a party for accuracy
and completeness.” Bomont Indus. v. United States,
733 F. Supp. 1507, 1508 (CIT 1990) (cleaned up). Com-
merce has latitude in how it conducts verification, and
there is no requirement to verify all information sub-
mitted by a respondent. U.S. Steel Corp. v. United
States, 953 F. Supp. 2d 1332, 1348 (CIT 2013).
B. Antidumping 	investigations 	involving
non-market economies
When, as here, an antidumping investigation in-
volves products produced in a non-market economy, 4
the statutory and regulatory scheme requires Com-
merce to undertake additional areas of inquiry. Two
such inquiries relevant here are whether an exporter
is subject to a general rate applicable to the country
and determining what the “normal” price for the prod-
uct in question would be if the country had a market
economy.
1. “Separate rate” versus “country-wide
rate” in non-market economies
In general, when Commerce makes an affirmative
determination that dumped goods are coming from a
non-market economy country, Commerce applies a re-
buttable presumption that every exporter or producer
4 A “non-market economy” is defined as “any foreign coun-
try that [Commerce] determines does not operate on mar-
ket principles of cost or pricing structures, so that sales of
merchandise in such country do not reflect the fair value of
the merchandise.” 19 U.S.C. § 1677(18)(A).
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within that country is government-controlled and is
therefore subject to a single country-wide dumping
margin. See 19 C.F.R. § 351.107(d); see also Chang-
zhou Hawd Flooring Co. v. United States, 947 F.3d
781, 792 (Fed. Cir. 2020).
Because the presumption is rebuttable, a company
may ask Commerce to apply a separate rate if the com-
pany 	demonstrates 	“sufficient 	independence 	from
state control.” Changzhou Wujin Fine Chem. Factory
Co. v. United States, 701 F.3d 1367, 1370 (Fed. Cir.
2012). A successful separate rate applicant thus es-
capes the country-wide antidumping rate.
The company seeking the separate rate must “af-
firmatively 	demonstrate” 	its 	independence. 	Sigma
Corp. v. United States, 117 F.3d 1401, 1405 (Fed. Cir.
1997). To that end, Commerce requires exporters or
producers who wish to receive a separate rate to sub-
mit a “separate rate application” “and to demonstrate
an absence of both de jure and de facto government
control over their export activities.” ECF 28, at 621. 5
As Commerce explained in its final decision here, if
the Department determines that a company from a
nonmarket economy is independent from government
control, the Department will assign an antidumping
rate based on its investigation of the company rather
than apply the country-wide rate. See ECF 17-5, at 4.
If Commerce does not investigate a company that is
5 In this opinion, pagination references in citations to the
Court record are to the pagination found in the ECF header
at the top of each page.
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otherwise eligible for a separate rate, then the Depart-
ment will generally assign an antidumping rate based
on the average rate of companies so investigated. Id. 6
2. Valuing “factors of production” in in-
vestigations 	involving 	non-market
economies
As noted above, the antidumping statute requires
that Commerce determine the subject merchandise’s
“normal value” and then compare that value to the ex-
port 	price 	or 	constructed 	export 	price. 	19 	U.S.C.
§ 1677b(a). When goods subject to antidumping inves-
tigation are produced in a country with a non-market
economy, the statute requires Commerce to assume
that home-market sales are not reliable indicators of
normal value because the economy is presumed to be
under state control. Taian Ziyang Food Co. v. United
States, 637 F. Supp. 2d 1093, 1105 (CIT 2009).
For merchandise imported from a country deemed
to have a non-market economy, the statute requires
Commerce to
6 Essentially, the “separate rate” applied to eligible produc-
ers and exporters from non-market economy countries is
analogous to the “all-others rate” applied to non-investi-
gated 	companies 	from 	market 	economy 	countries. 	See
Changzhou Hawd Flooring Co. v. United States, 848 F.3d
1006, 1011 (Fed. Cir. 2017) (noting that Commerce applies
the statutory mechanism for determining the “all-others
rate” of noninvestigated entities from market economy
countries to determine the “separate rate” for eligible enti-
ties from non-market economy countries); see also above
note 3.
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determine the normal value of the subject mer-
chandise on the basis of the value of the factors
of production utilized in producing the merchan-
dise and to which shall be added an amount for
general expenses and profit plus the cost of con-
tainers, coverings, and other expenses. . . . [T]he
valuation of the factors of production shall be
based on the best available information regard-
ing the values of such factors in a market econ-
omy country or countries considered to be appro-
priate by [Commerce].
19 U.S.C. § 1677b(c)(1).
“Factors of production” is a term of art for the dif-
ferent things that go into manufacturing a product,
such as raw materials, electricity, and labor. All these
things cost money, so theoretically the product’s price
should reflect these costs. The statute requires Com-
merce to determine what the producer would have
spent to prepare the subject merchandise if the coun-
try of origin had a market economy rather than a non-
market 	economy. 	See 	Lasko 	Metal 	Prods., 	Inc. 	v.
United States, 810 F. Supp. 314, 316–17 (CIT 1992)
(“With respect to [non-market economy] goods, the
statute’s goal is to determine what the cost of produc-
ing such goods would be in a market economy.”), aff’d,
43 F.3d 1442 (Fed. Cir. 1994); see also Baoding Yude
Chem. Indus. Co. v. United States, 170 F. Supp. 2d
1335, 1345 (CIT 2001) (explaining that the task is not
to construct the cost of producing the subject merchan-
dise in a particular market economy, but rather to use
data from comparable market-economy countries to
construct what the cost of production would have been
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in the actual country of origin if it were a market econ-
omy country).
The statute requires that, in making the valuation
described above, Commerce “shall utilize, to the extent
possible, the prices or costs of factors of production in
one or more market economy countries that are—
(A) at a level of economic development comparable to
that of the nonmarket economy country, and (B) sig-
nificant 	producers 	of 	comparable 	merchandise.”
19 U.S.C. § 1677b(c)(4).
The market economy country, or countries, from
which Commerce uses data to value the factors of pro-
duction is known as the “surrogate country.” Com-
merce’s 	administrative 	regulations 	provide 	further
guidance as to how Commerce selects the “surrogate
country” for such valuations. “In determining whether
a country is at a level of economic development compa-
rable to the nonmarket economy . . . , the Secretary
will place primary emphasis on per capita GDP as the
measure 	of 	economic 	comparability.” 	19 	C.F.R.
§ 351.408(b). In addition, “the Secretary normally will
value all factors in a single surrogate country.” Id.
§ 351.408(c)(2). 7 Based on that preference for a single
7 This provision contains an exception for labor, which it
states is to be valued according to 19 C.F.R. § 351.408(c)(3).
However, despite its continued inclusion in the Code of
Federal Regulations, § 351.408(c)(3) was invalidated in
2010, Dorbest Ltd. v. United States, 604 F.3d 1363, 1372
(Fed. Cir. 2010), and no party has argued that Commerce
should have applied it in this case. Instead, since 2011,
Commerce typically values non-market economy respond-
ents’ 	labor 	rates 	“using 	industry-specific 	labor 	costs
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surrogate country, when available data come from sev-
eral countries that are both at a level of economic de-
velopment 	comparable 	to 	the 	nonmarket 	economy
country and significant producers of comparable mer-
chandise, 	Commerce 	examines 	all 	those 	countries’
data to determine which set it deems best and then se-
lects that country as the primary surrogate country.
Jiaxing Bro. Fastener Co. v. United States, 822 F.3d
1289, 1294 (Fed. Cir. 2016).
Factual and Procedural Background
A. Commerce’s 	investigation 	and 	assess-
ment of duties
This case stems from an antidumping investigation
that 	Commerce 	undertook 	at 	the 	request 	of 	New
American Keg, which does business under the name
American Keg Company and is the plaintiff in this
case. American Keg describes itself as the sole U.S.
producer of refillable stainless steel kegs and claims
that by 2018, it faced imminent closure due to foreign
competition. ECF 21, at 12. American Keg contends
that unfairly traded imports were a major cause of its
struggles and, accordingly, in 2018 the company filed
antidumping duty petitions against kegs from China,
Germany, and Mexico. Id. This case involves the kegs
imported from China.
prevailing in the primary surrogate country.” Antidumping
Methodologies in Proceedings Involving Non-Market Econ-
omies: Valuing the Factor of Production: Labor, 76 Fed.
Reg. 36,092, 36,094 (Dep’t Commerce June 21, 2011).
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In response to American Keg’s petitions, Commerce
commenced 	an 	antidumping 	investigation 	covering
the period from January 1, 2018, through June 30,
2018. Refillable Stainless Steel Kegs from the People’s
Republic of China, the Federal Republic of Germany,
and Mexico: Initiation of Less-Than-Fair-Value Inves-
tigations, 	83 	Fed. 	Reg. 	52,195 	(Dep’t 	Commerce
Oct. 16, 2018).
Commerce selected Ningbo Master International
Trade Co., Ltd. (“Ningbo Master”), as one of two man-
datory respondents. Id. at 50–54. 8 Ningbo Master filed
its own separate rate application, 9 as did (as relevant
here) two other Chinese keg exporters—Guangzhou
Jingye Machinery Co., Ltd. (“Jingye”), and Guangzhou
Ulix Industrial & Trading Co, Ltd. (“Ulix”). Id. at 612,
621–24.
Commerce preliminarily determined that Chinese
kegs were being, or were likely to be, dumped in the
United States. Refillable Stainless Steel Kegs from the
People’s Republic of China: Preliminary Affirmative
Determination of Sales at Less Than Fair Value, Pre-
liminary Affirmative Determination of Critical Cir-
cumstances, in Part, Postponement of Final Determi-
nation, and Extension of Provisional Measures, 84 Fed.
8 The other entity selected as a mandatory respondent de-
clined to participate in Commerce’s investigation, thus
leaving Ningbo Master as the sole mandatory respondent.
9 Ningbo Master filed its own separate rate application be-
cause even though it was a mandatory respondent, it was
subject to the China-wide rate unless it demonstrated its
independence from the Chinese government.
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Reg. 	25,745, 	25,745–46 	(Dep’t 	Commerce 	June 	4,
2019). In so doing, Commerce preliminarily set a hefty
China-wide rate of 79.71 percent. Id.
Commerce also preliminarily found that Ningbo
Master, Jingye, and Ulix were entitled to separate rate
status, thus sparing them from the hefty China-wide
rate. ECF 28, at 622–24. Based on its investigation of
Ningbo Master, Commerce preliminarily set its rate at
2.01 percent. Id. at 624. And because Ningbo Master
was the only mandatory respondent that cooperated
with the investigation, Commerce preliminarily set
separate rates for Jingye and Ulix (which were not in-
vestigated) using Ningbo Master’s 2.01 percent rate.
Id.
Subsequently, Commerce conducted verification in
China, where Ningbo Master presented information it
characterized as “minor corrections” to its prior sub-
missions. ECF 21, at 15; ECF 23, at 13–14. Commerce
accepted that information, but as discussed below, the
parties disagree over whether Commerce properly ver-
ified it.
Following 	verification, 	Commerce 	confirmed 	its
preliminary decision that steel kegs imported from
China were being, or were likely to be, sold in the
United States at less than fair value. Refillable Stain-
less Steel Kegs from the People’s Republic of China: Is-
sues and Decision Memorandum for the Final Affirm-
ative Determination of Sales at Less Than Fair Value
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(Oct. 17, 2019), ECF 17-5, at 1. 10 This final decision set
the China-wide antidumping rate at 77.13 percent.
ECF 17-5, at 4. The validity of this China-wide rate is
not challenged here.
Commerce’s final decision also reaffirmed its pre-
liminary decision that Ningbo Master, Jingye, and
Ulix were entitled to separate rate status. Id. at 3. But
in a change from its preliminary decision, Commerce
also reduced Ningbo Master’s rate to zero. Id. at 4. The
latter determination had the ripple effect of reducing
the rate for the successful separate rate applicants
Jingye and Ulix to zero as well. Id.
In the meantime, the ITC concurrently found “that
the establishment of an industry in the United States
is materially retarded . . . by reason of imports of re-
fillable stainless steel kegs from . . . China.” Refillable
Stainless Steel Kegs from the Federal Republic of Ger-
many and the People’s Republic of China: Antidump-
ing Duty Orders, 84 Fed. Reg. 68,405, 68,405–06 (Dep’t
Commerce Dec. 16, 2019). Commerce accordingly im-
posed antidumping duties consistent with the values
set 	forth 	in 	the 	October 	2019 	final 	decision. 	Id.
at 68,407; see also 84 Fed. Reg. at 57,011.
10 The results of this final decision were published in the
Federal Register. See Refillable Stainless Steel Kegs from
the People’s Republic of China: Final Affirmative Determi-
nation of Sales at Less Than Fair Value and Final Affirm-
ative Determination of Critical Circumstances, in Part, 84
Fed. Reg. 57,010, 57,010 (Dep’t Commerce Oct. 24, 2019).
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B. This litigation
American Keg’s complaint alleges that it is a do-
mestic manufacturer and producer of “a domestic like
product” to that which was the subject of Commerce’s
final decision, ECF 8, at 2, and asserts seven counts
for relief under 19 U.S.C. § 1516a(a)(2)(B)(i) challeng-
ing certain aspects of that decision. 11 American Keg
asks the Court to “[h]old that the portions of Com-
merce’s Final Determination described herein are not
supported by substantial evidence on the record and
are otherwise not in accordance with law,” ECF 8,
at 14, and to remand the matter to Commerce for fur-
ther proceedings, id.
11 Count I alleges that Commerce’s decision to rely on Ma-
laysian data as surrogate values for labor costs in calculat-
ing Ningbo Master’s rate was not supported by substantial
evidence or otherwise not in accordance with law due to
data reflecting forced labor in Malaysia. ECF 8, at 9 ¶ 37.
Count II alleges that Commerce should not have accepted
nor relied on Ningbo Master’s “minor corrections” submit-
ted at verification because they resulted in a de minimis
dumping margin. Id. at 10 ¶¶ 39–40. Counts III and IV are
not relevant here as American Keg has opted to drop them.
See ECF 31, at 2 (“Plaintiff has chosen not to pursue or seek
judgment with respect to Counts III and IV . . . .”). Count
V contends that Commerce’s decision to grant separate
rate status to Jingye was incorrect because Jingye failed to
rebut the presumption of government control. ECF 8, at 12
¶¶ 48–49. Count VI makes a similar allegation as to Ulix.
Id. at 12 ¶¶ 51–52. Finally, Count VII asserts that to the
extent Commerce erred in calculating Ningbo Master’s rate
as alleged in Counts I and II, Commerce also erred in ap-
plying that rate to Jingye and Ulix insofar as they are eli-
gible for separate rate status. Id. at 13 ¶ 54.
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Ningbo Master and Jingye intervened as a matter
of right to defend Commerce’s decision. ECF 16. Amer-
ican Keg thereafter filed the pending Rule 56.2 motion
for judgment on the agency record. ECF 21; see also
USCIT R. 56.2. The government (ECF 23) and the in-
tervenors (ECF 25) oppose. As no party has requested
oral argument, the Court decides the motion on the pa-
pers.
Jurisdiction and Standard of Review
The Court has subject-matter jurisdiction pursuant
to 28 U.S.C. § 1581(c).
In actions such as this brought under 19 U.S.C.
§ 1516a(a)(2), “[t]he court shall hold unlawful any de-
termination, finding, or conclusion found . . . to be un-
supported by substantial evidence on the record, or
otherwise 	not 	in 	accordance 	with 	law.” 	19 	U.S.C.
§ 1516a(b)(1)(B)(i). That is, the question is not whether
the Court would have reached the same decision on the
same record—rather, it is whether the administrative
record as a whole permits Commerce’s conclusion.
Substantial evidence has been defined as more
than a mere scintilla, as such relevant evidence
as a reasonable mind might accept as adequate
to support a conclusion. To determine if substan-
tial evidence exists, we review the record as a
whole, including evidence that supports as well
as evidence that fairly detracts from the sub-
stantiality of the evidence.
Nippon Steel Corp. v. United States, 337 F.3d 1373,
1379 (Fed. Cir. 2003) (cleaned up).
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Questions 	involving 	the 	verification 	procedures
Commerce employs are reviewed for an abuse of dis-
cretion. Micron Tech., Inc. v. United States, 117 F.3d
1386, 1396 (Fed. Cir. 1997).
Discussion
American Keg’s motion for judgment on the agency
record 	in 	effect 	presents 	three 	principal 	issues:
(1) whether substantial evidence supports Commerce’s
use of Malaysian labor data as a surrogate for Ningbo
Master’s labor costs in the face of record evidence of
forced labor in Malaysia; (2) whether substantial evi-
dence 	supports 	Commerce’s 	verification 	of 	Ningbo
Master’s corrections; and (3) whether substantial evi-
dence supports Commerce’s grant of separate rate sta-
tus to Jingye and Ulix. The Court addresses these is-
sues in turn.
I. 	Labor surrogate value12
In view of China’s status as a non-market economy
country, 13 the statute required Commerce to assess
the “factors of production” used in producing kegs to
12 This discussion corresponds to Commerce’s findings in
ECF 17-5, at 7–12.
13 Commerce previously deemed China as a non-market
economy country and reaffirmed that position in 2017. See
ECF 28, at 616 (citing Antidumping Duty Investigation of
Certain 	Aluminum 	Foil 	from 	the 	People’s 	Republic 	of
China: Affirmative Preliminary Determination of Sales at
Less-Than-Fair Value and Postponement of Final Determi-
nation, 	82 	Fed. 	Reg. 	50,858, 	50,861 	(Dep’t 	Commerce
Nov. 2, 2017)).
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 18 of 57
Court No. 20-00008 	Page 19
determine their “normal value,” and further required
that the Department base that valuation “on the best
available information regarding the values of such fac-
tors in a market economy country or countries consid-
ered to be appropriate by [Commerce].” 19 U.S.C.
§ 1677b(c)(1). As one of the factors of production is la-
bor costs, Commerce had to determine which country
with a market economy could function as a surrogate
for determining Ningbo Master’s labor costs in China.
A. Commerce’s findings
In this case, consistent with the statutory require-
ments, Commerce identified Brazil, Kazakhstan, Ma-
laysia, Mexico, Romania, and Russia “as countries
that are at the same level of economic development as
China” and sought comments from interested parties.
ECF 28, at 617. Both American Keg and Ningbo Mas-
ter recommended Malaysia as the primary surrogate
country for this investigation. Id.
Nevertheless, American Keg objected to using Ma-
laysia as the sole surrogate country, arguing that Ma-
laysian labor data are “unreliable and aberrational”
because they reflect “child and forced labor practices.”
Id. at 620. American Keg instead argued that Com-
merce should have relied on labor data from Brazil.
ECF 17-5, at 7. In its final decision, Commerce rejected
American Keg’s position and found “that there is in-
sufficient evidence on the record to find that the Ma-
laysia labor rate is aberrational or unreliable such
that we should reject it in favor of other labor rate in-
formation on the record.” Id. at 9.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 19 of 57
Court No. 20-00008 	Page 20
Commerce explained that the Department consid-
ers the “quality, specificity, and contemporaneity of
the [surrogate value] data” and “prefer[s] to value all
[factors of production] based on data from the primary
surrogate country.” Id. Commerce stated that the rec-
ord reflected labor surrogate values from three coun-
tries—Malaysia, 	Mexico, 	and 	Brazil. 	The 	Mexican
value was specific to “[m]anufacture of thick gauge
metal tanks,” but Commerce rejected it for this case
because it was from two years prior to the relevant pe-
riod of review and came from a source Commerce had
previously deemed problematic. Id. at 9–10. It appears
no party objects to that decision. That left the Malay-
sian and Brazilian labor data for consideration.
Commerce found that both the Malaysian and Bra-
zilian labor data related generically to “manufactur-
ing” and further found that the Malaysian data were
contemporaneous 	with 	the 	period 	of 	investigation
while the Brazilian data—like the Mexican data—
were from two years earlier. Id. at 9. “Thus, the only
reason we might select the Brazil [surrogate value]
over the Malaysia [surrogate value] is if record evi-
dence 	demonstrates 	that 	the 	Malaysia 	[surrogate
value] is aberrational, distorted, or unreliable.” Id.
at 10.
American Keg argued that the evidence demon-
strated that the Malaysian data were aberrational,
contending that evidence of forced labor within the
Malaysian industry’s electrical and electronics sector
should be extrapolated to Malaysian manufacturing as
a whole. Id. Commerce, in response, found that “the
record is not clear regarding the extent to which forced
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 20 of 57
Court No. 20-00008 	Page 21
labor is a factor in Malaysia’s manufacturing sector.”
Id.
Commerce ultimately decided to use the Malaysian
labor data to value factors of production “because it is
from the primary surrogate country, is contemporane-
ous with the [period of investigation], and the record
does not indicate that the Brazil [surrogate value] is
the best information available when compared to the
Malaysia [surrogate value] due to the presence of
forced labor in one subsector of Malaysia’s manufac-
turing sector.” Id. at 12.
B. Analysis
American Keg cites four reports it characterizes as
demonstrating 	that 	“forced 	labor 	is 	widespread
throughout Malaysia’s [electrical and electronics] sec-
tor and distorts sector wages” and that “the [electrical
and electronics] sector comprises such a significant
portion 	of 	Malaysia’s 	overall 	manufacturing 	sector
that these labor abuses render the wage rate for over-
all 	manufacturing 	aberrational 	and 	unreliable.”
ECF 21, at 26. American Keg further argues that Com-
merce “did not seriously engage” with this evidence,
and that the Court must remand to require the agency
to do so. Id. at 27.
The Court considers in turn each of the three bases
upon which Commerce rejected American Keg’s argu-
ment that the Malaysian labor data are unreliable.
First, Commerce found that the administrative record
did not “demonstrate how pervasive forced labor may
be” in Malaysia’s electrical and electronics industry.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 21 of 57
Court No. 20-00008 	Page 22
ECF 17-5, at 11. Second, it appears that Commerce
doubted whether the record supported American Keg’s
contention that Malaysia’s electrical and electronics
industry “accounts for a significant part of Malaysia’s
manufacturing sector.” Id. at 11. Finally, in what
amounts to an alternative ground, Commerce con-
cluded that even if forced labor is as pervasive in the
Malaysian electrical and electronics industry as Amer-
ican Keg contends, and even if the workforce in that
industry comprises one-third of Malaysia’s total man-
ufacturing workforce as American Keg also contends,
it would simply indicate that forced labor implicates
less than ten percent of the Malaysian manufacturing
work, and that such a figure would not render the Ma-
laysian surrogate value unreliable. Id.
1. What does the record demonstrate re-
garding the extent of forced labor in
Malaysia’s electrical and electronics
industry?
American Keg’s evidence of forced labor in the Ma-
laysian electrical and electronics industry consisted of
a report by a private entity, Verité, as well as three
governmental reports. Commerce first addressed the
Verité report, see ECF 17-5, at 10–11, and then ad-
dressed the three governmental reports as a group, id.
at 11.
a. The Verité report
Verité describes itself as “a global [non-governmen-
tal organization] with a mission to ensure that people
around the world work under safe, fair, and legal
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 22 of 57
Court No. 20-00008 	Page 23
conditions.” ECF 28, at 243. In 2014, it issued a highly-
detailed 245-page report funded by the U.S. Labor De-
partment entitled “Forced Labor in the Production of
Electronic Goods in Malaysia: A Comprehensive Study
of Scope and Characteristics.” See id. at 242–44. 14
For this report, Verité’s researchers conducted a
combination of desk and field research, including in-
terviewing 501 electronics workers. Id. at 250. In in-
terpreting the data collected, Verité followed the Inter-
national Labor Organization’s survey guidelines to es-
timate forced labor. Id. In applying those guidelines,
Verité stated that it “erred consistently on the side of
caution, choosing to define forced labor narrowly to en-
sure that the positive findings were always based on
solid, unambiguous evidence.” Id. Verité further ex-
plained its methodology and external constraints on
its research as follows:
x 	Verité 	used 	“purposive 	targeted 	sampling 	to
achieve a nonprobability sample that reflected
the 	population 	of 	electronics 	workers 	as
14 Verité used the International Labor Organization defini-
tion of forced labor:
[W]ork for which a person has not offered himself or
herself voluntarily . . . and which is performed under
the menace of any penalty . . . applied by an employer
or third party to the worker. The coercion may take
place during the worker’s recruitment process to force
him or her to accept the job, or, once the person is work-
ing, to force him/her to do tasks which were not part of
what was agreed at recruitment or to prevent him/her
from leaving the job.
ECF 28, at 317.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 23 of 57
Court No. 20-00008 	Page 24
accurately as possible” and it “is confident in the
robustness of the data presented, but including
more participants would no doubt have made
the research even stronger.” Id. at 314.
x 	Verité’s researchers were hampered by a “cli-
mate of pervasive surveillance” that discouraged
workers from speaking with Verité researchers,
and the Verité team members themselves “were
frequently subject to the same modes of surveil-
lance and threats of detention and deportation
as the workers they sought to interview.” Id.
at 313.
x 	“Because it is likely that workers with the great-
est vulnerability to exploitation and/or forced la-
bor were also likely to have been especially cau-
tious about participating in the research, Ver-
ité’s positive findings of forced labor and forced
labor indicators among those participants are
probably low estimates.” Id. at 314.
The report further stated that due to this cautious
methodology and the surveillance and threats that ob-
structed researchers’ work, “the positive findings of
forced labor reported below are likely lower than the
actual rates of forced labor in the Malaysian electron-
ics industry and should be viewed as a minimum esti-
mate.” Id.
The report’s principal findings included the follow-
ing:
x 	“Forced labor is present in the Malaysian elec-
tronics industry” and can be characterized “as
widespread.” Id. at 251.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 24 of 57
Court No. 20-00008 	Page 25
x 	“[F]orced labor in the sector is strongly associ-
ated with the plight of foreign workers.” Id.
at 421.
x 	Twenty-eight percent of all workers—a “mini-
mum estimate” based on conservative criteria—
in the study sample were found to be in situa-
tions of forced labor. Id. at 251.
x 	“Forced labor is linked to recruitment fee charg-
ing and the indebtedness that follows.” Id. Such
fees were “often excessive” and “pervasive” in
the context of foreign workers. Id.
x 	“Recruitment-related debt compelled workers to
work.” Id. at 252.
x 	“Forced labor is also linked to deceptive recruit-
ment.” Twenty-two percent of foreign workers
were misled about the terms and conditions of
their employment, and these workers “had little
ability to change or refuse their jobs upon arri-
val.” Id.
x 	Passport retention “was widely experienced” by
foreign workers and constrained “their freedom
of movement.” Id.
x 	When the study’s definition of passport reten-
tion was broadened beyond the narrow Interna-
tional Labor Organization definition, “the aggre-
gate forced labor finding rose appreciably: Fifty-
eight percent of all respondents, or 66% of all for-
eign workers, were found to be in forced labor.”
Id. at 255.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 25 of 57
Court No. 20-00008 	Page 26
x 	It was difficult for foreign workers to leave be-
fore the end of their work contracts. Id. at 253.
x 	“Vulnerability to forced labor is a prominent fea-
ture of the Malaysian electronics workforce,”
with 73% of workers in the study exhibiting
“forced labor characteristics of some kind, a find-
ing which suggests that the risk of forced labor
in the industry is extremely high.” Id. at 254.
x 	The study found “conclusive evidence of forced
labor in the sample” that “lend[s] a sense of per-
vasiveness” to the “previous, largely qualitative
research on the subject.” Id. at 256.
x 	The “indicators of forced labor” reflect “systemic,
structural factors shaping the lives of foreign
workers in the country.” Id.
x 	Verité’s “core research findings broadly corrobo-
rate the troubling patterns” of forced labor in
Malaysia identified in four prior studies by other
international and human rights organizations,
two of which did not focus on the electronic in-
dustry. Id. at 320.
Commerce responded to the Verité study with the
following three sentences:
While the Verité Report states that its study
“suggests that forced labor is present in the Ma-
laysian electronics industry and can be charac-
terized as widespread,” the Verité Report indi-
cates that it is based on a sample of 501 workers
in Malaysia’s E&E industry, and that 28 percent
of the workers in its study were found to be in
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 26 of 57
Court No. 20-00008 	Page 27
situations of forced labor and an additional 46
percent of the workers in its study were deemed
to be “on the threshold” of forced labor. We can-
not conclude that data developed from the sam-
ple are applicable across the E&E sector in a
manner that indicates that a similar proportion
of workers in Malaysia’s E&E industry as a
whole were in situations of forced labor as were
identified in the study. Neither would it be ap-
propriate to conclude that the findings of this re-
port apply more broadly across the manufactur-
ing sector.
ECF 17-5, at 10–11 (emphasis added).
American Keg argues that Commerce’s rejection of
the Verité report based on the report’s sample size was
not based on any actual analysis. “At no time did Com-
merce acknowledge or contend with the report’s de-
tailed review of its research methodology or sampling
approach.” ECF 21, at 27. Nor did Commerce “offer
any reasoned rebuttal” to Verité’s statement that its
findings of forced labor “are probably low estimates.”
Id. at 28 (quoting ECF 28, at 314).
In response, the government contends that there
was no reason for Commerce to “employ statistical
analyses of” the Verité report when the report itself
states that because “the research employed nonproba-
bility sampling, . . . the data are not representative in
a statistical sense.” ECF 23, at 25 (quoting ECF 28,
at 314 (government’s alterations omitted)).
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 27 of 57
Court No. 20-00008 	Page 28
The government’s post-hoc hypothesis does not ex-
cuse Commerce’s summary dismissal of the Verité re-
port based on its sample size. One can only guess why
Commerce deemed the Verité sample size inadequate,
and for that reason the Court must remand so the
agency can explain its reasoning. Cf. Nat’l Ass’n of
Clean Water Agencies v. EPA, 734 F.3d 1115, 1154
(D.C. Cir. 2013) (“Although [the] EPA does not need to
fill the Federal Register with treatises on statistics, it
must specify in greater detail why the equation it is
using can accomplish the purpose for which [the] EPA
is using the equation. This is not only required as part
of [the] EPA’s obligation to demonstrate the reasona-
bleness of its estimates with substantial evidence, but
also to prevent an agency from using opaque statistical
justification to cover a deficiency in its dataset.”).
On remand, Commerce must explain why the Ver-
ité sample size is inadequate, and in so doing it must
address the material in the Verité report that fairly
detracts from the Department’s conclusion that the re-
port’s sample size is inadequate for purposes of deter-
mining whether “there is a reason to doubt” the Ma-
laysian data. Camau Frozen Seafood Processing Imp.
Exp. Corp. v. United States, 929 F. Supp. 2d 1352, 1356
(CIT 2013).
b. The governmental reports
American Keg also points to three governmental re-
ports in the record addressing forced labor in Malay-
sia.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 28 of 57
Court No. 20-00008 	Page 29
i. 	The Labor Department report
In 2019, the Labor Department issued a report en-
titled “2018 List of Goods Produced by Child Labor or
Forced Labor.” ECF 28, at 201. 15 This report identified
forced labor as present in the Malaysian electronics
and garment industries. ECF 28, at 217. Of additional
relevance here—given that American Keg contends
that Commerce should use labor data from Brazil ra-
ther than Malaysia—is the report’s comparison of how
certain foreign workers make their way to Malaysia
and Brazil.
In the case[] of the Nepal to Malaysia . . . corri-
dor, where recruitment agencies are often used,
the report found there was widespread non-com-
pliance by licensed recruiters with legal and pol-
icy frameworks; few penalties applied by author-
ities; systemic illegal recruitment; and the abil-
ity to legally charge recruitment fees. In the Par-
aguay to Brazil corridor, the study found that in-
formal networks of friends and family played a
large role in helping workers find jobs and in or-
ganizing travel and accommodation. Addition-
ally, . . . travel between the two countries is in-
expensive, and easy to arrange.
15 The Labor Department issued this report pursuant to the
Trafficking Victims Protection Act, which requires the De-
partment to “develop and make available to the public a
list of goods from countries that the Bureau of Interna-
tional Labor Affairs has reason to believe are produced by
forced labor or child labor in violation of international
standards.” 22 U.S.C. § 7112(b)(2)(C).
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 29 of 57
Court No. 20-00008 	Page 30
Id. at 222.
ii. The State Department Report
In 2018, the State Department issued a study enti-
tled “Trafficking in Persons Report.” See generally
ECF 28, at 228–39. This report indicates that
[a]s reported over the past five years, Malaysia
is a destination . . . for men, women, and children
subjected to forced labor . . . . The overwhelming
majority of victims are among the estimated two
million documented and an even greater number
of undocumented migrant laborers in Malaysia.
Foreign workers constitute more than 20 percent
of the Malaysian workforce and typically mi-
grate voluntarily—often illegally—from Bangla-
desh, India, Nepal, Burma, Indonesia, the Phil-
ippines, and other Asian countries. Employers,
employment agents, and informal labor recruit-
ers subject some migrants to forced labor or debt
bondage when they are unable to pay the fees for
recruitment and associated travel. Outsourcing
or contract labor companies may not have over-
sight of personnel issues or day-to-day working
conditions, leading to heightened vulnerabilities
to exploitative labor conditions and a reduced
ability to resolve disputes for foreign workers.
Agents in labor source countries may impose on-
erous fees on workers before they arrive in Ma-
laysia, and additional administrative fees after
arrival in some cases cause debt bondage. Large
organized crime syndicates are responsible for
some instances of trafficking.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 30 of 57
Court No. 20-00008 	Page 31
Id. at 238 (emphasis added). The report also states
that some foreign workers in the Malaysian electron-
ics industry—among other industries—are “subjected
to practices that indicate forced labor.” Id.
iii. 	The Central Bank of Malaysia
report
In 2018, the Central Bank of Malaysia issued a re-
port entitled “Low Skilled Foreign Workers’ Distor-
tions to the Economy.” See ECF 28, at 498–598. The
report stated that foreign workers comprise more than
20 percent of Malaysia’s workforce in manufacturing,
agriculture, and construction sectors. Id. at 500. This
“unchecked reliance on foreign workers . . . depresses
overall pay.” Id. at 498; see also id. at 500 (“Critically,
the readily available pool of cheaper low-skilled for-
eign workers distorts domestic [labor] prices.”) (em-
phasis added); id. at 501 (“Employment of cheaper for-
eign workers vis-à-vis locals allows employers to keep
wages low . . . .”). The report concluded that “Malaysia
would benefit from a clear shift away from an economy
that is . . . dependent upon cost suppression as a source
of competitive strength . . . .” Id. at 499 (emphasis
added).
* * *
Commerce dismissed the relevance of these three
reports, reasoning that they “do not address or demon-
strate how pervasive forced labor may be in Malaysia’s
[electrical and electronics] industry.” ECF 17-5, at 11.
According to Commerce, neither these reports nor any
other evidence in the administrative record indicates
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 31 of 57
Court No. 20-00008 	Page 32
“the extent to which forced labor occurs in Malaysia’s
[electrical] industry.” Id.
American Keg argues that while these three gov-
ernmental reports do not provide a quantitative anal-
ysis, they do document practices in the Malaysian elec-
trical and electronics sector that depress wage rates.
ECF 21, at 28. The government has no response other
than to repeat Commerce’s finding. ECF 23, at 24. Nor
do Defendant-Intervenors have any response.
In 	reply, 	American 	Keg 	argues, 	and 	the 	Court
agrees, that Commerce’s perfunctory rejection of these
three governmental reports does not withstand scru-
tiny. See ECF 26, at 7. These reports corroborate the
Verité report’s conclusion that “forced labor distorts
both [electrical and electronics] wages and those for
the broader manufacturing sector,” id., and fairly de-
tract from Commerce’s conclusion. On remand, Com-
merce must materially address the substance of these
reports in conjunction with its reconsideration of the
Verité report.
2. What does the record demonstrate re-
garding the extent to which the Ma-
laysian manufacturing workforce is
comprised of electrical and electron-
ics industry workers?
Evidence from the Malaysian Department of Statis-
tics in the administrative record states that employ-
ment in the country’s electrical and electronics indus-
try totaled 322,308 persons in 2016, ECF 28, at 527,
and that employment in all manufacturing in 2016
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 32 of 57
Court No. 20-00008 	Page 33
totaled 1,032,897. Id. at 182. Basic arithmetic indi-
cates that employment in Malaysia’s electrical and
electronics industry therefore must have comprised
over 31 percent of the total Malaysian manufacturing
labor force.
Commerce rejected this number on the basis that
“the figures [American Keg] cites in its case brief come
from two different sources which are not necessarily
comparable.” ECF 17-5, at 11. The government rechar-
acterizes this as a rejection based on data sets for dif-
ferent years, see ECF 23, at 26, but that response errs
at two levels. First, the relevant data sets were from
the same year—2016. Second, the government mis-
characterizes Commerce’s rationale, which was based
on the finding of “two different sources.” Id. That ra-
tionale is not supported by substantial evidence, as
American Keg’s data came from a single source—the
Malaysian Department of Statistics. On remand, Com-
merce must address this evidence in the record that
employment in Malaysia’s electrical and electronics
industry comprised over 31 percent of the total Malay-
sian manufacturing labor force.
3. Does 	evidence 	of 	forced 	labor 	in
8.7 percent of the Malaysian manufac-
turing 	workforce 	render 	Malaysian
wage data distorted?
Commerce finally decided that even if it assumed
that (1) employment in Malaysia’s electrical and elec-
tronics industry comprised over 31 percent of the total
Malaysian manufacturing labor force, and (2) the pro-
portion of workers affected by forced labor conditions
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 33 of 57
Court No. 20-00008 	Page 34
as reported by the Verité report were correct, “it would
indicate that less than one-tenth [8.7 percent] of the
workers in Malaysia’s overall manufacturing sector
[are] implicated by forced labor.” ECF 17-5, at 11.
Commerce concluded that in view of this number, “we
find that the record does not demonstrate that the
forced labor in Malaysia’s [electrical and electronics
industry]” rendered the Malaysian labor data “aberra-
tional or distortive, such that it cannot be considered
the best information available given the other infor-
mation on the record.” Id. (emphasis added).
American Keg argues, and the Court agrees, that
Commerce did not actually analyze whether the Ma-
laysian data under this forced labor cloud constituted
the best available information on the record. Com-
merce instead relied on the facts that Malaysian data
were from the primary surrogate country and contem-
poraneous with the period of investigation. Id. at 13.
The preferences for a single surrogate country and
contemporaneity are acceptable tiebreakers, provided
Commerce undertakes a fair comparison of the com-
peting 	datasets. 	See, 	e.g., 	Peer 	Bearing 	Company-
Changshan v. United States, 804 F. Supp. 2d 1337,
1353 (CIT 2011) (“[T]he preference for use of data from
a single surrogate country could support a choice of
data as the best available information where the other
available data ‘upon a fair comparison, are otherwise
seen to be fairly equal . . . .’ ”). In other words, it is not
enough for Commerce to say “the alternate data are
insufficient because they are from a different surro-
gate country” or “are from two years earlier”—rather,
when “there is reason to doubt the primary surrogate
country value, Commerce must address the conflicting
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 34 of 57
Court No. 20-00008 	Page 35
evidence on the record that may counsel against” Com-
merce’s 	preference 	for 	a 	single 	surrogate 	country.
Camau Frozen Seafood, 929 F. Supp. 2d at 1356. “Not
addressing the conflicting evidence on the record . . .
fails the substantial evidence test because it does not
[consider] record evidence contrary to Commerce’s de-
termination.” Id.
* * *
The record here indicates that forced labor occurs
to some degree among foreign workers in the Malaysia
manufacturing workforce, and that Malaysia’s heavy
reliance on foreign workers depresses local wages to
some extent. As a result, there is a non-frivolous ques-
tion about whether, and, if so, to what extent, Malay-
sia’s 	wage 	data 	that 	Commerce 	used 	to 	calculate
Ningbo Master’s rate are distorted or unreliable. Com-
merce has not explained—apart from its talismanic in-
vocation of its single-country surrogate and contempo-
raneity preferences—why the Malaysian data under
this forced labor cloud are preferable to the Brazilian
dataset.
On remand, Commerce must do so. Insofar as Com-
merce opts on remand to use the Brazilian data rather
than Malaysian data, it must reconsider Ningbo Mas-
ter’s dumping margin accordingly. 16
16 Due to the Court’s resolution of the separate rate issue
discussed below, any adjustments by Commerce to Ningbo
Master’s rate would also necessarily carry over to the rate
for Jingye and, insofar as it remains a successful separate
rate applicant after proceedings on remand, Ulix.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 35 of 57
Court No. 20-00008 	Page 36
II. Verification 	of 	Ningbo 	Master’s 	correc-
tions17
During verification, Ningbo Master submitted ad-
ditional information that it and the government char-
acterize as “minor corrections.” See ECF 17-5, at 15–
16 (government); ECF 25, at 14–20 (Ningbo Master).
American Keg disputes that characterization and ar-
gues that Commerce “failed to verify” this new infor-
mation that “was dispositive to the investigation.”
ECF 21, at 31.
According to American Keg, this issue matters be-
cause Commerce preliminarily assigned Ningbo Mas-
ter a 2.01 percent dumping margin. ECF 17-5, at 15.
By statute, any dumping margin of less than two per-
cent is deemed de minimis and is to be disregarded.
See 19 U.S.C. §§ 1673b(b)(3) (preliminary decisions),
1673d(a)(4) 	(final 	decisions). 	Thus, 	even 	a 	small
change in Ningbo Master’s dumping margin resulting
from “corrections” supplied during verification might
result in the company receiving a lower margin that
would fall within the de minimis threshold—and, in-
deed, that is exactly what happened, because Ningbo
Master received a zero percent final dumping margin
following verification. See 84 Fed. Reg. at 57,011.
Furthermore, because Ningbo Master was the only
separate rate respondent in this investigation to un-
dergo individual examination, the rate assigned to
Ningbo Master had a domino effect as to Jingye and
17 This discussion corresponds to Commerce’s findings in
ECF 17-5, at 15–16.
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Court No. 20-00008 	Page 37
Ulix because Commerce determined them to be eligi-
ble for separate rates. See ECF 17-5, at 4; 84 Fed. Reg.
at 57,011.
A. The verification record
Commerce’s 	verification 	memorandum 	described
various corrections that Ningbo Master submitted. See
ECF 28, at 667. Most of these were non-substantive on
their face, but American Keg zeroes in on a correction
to material inputs affecting the factors of production,
i.e., Ningbo Master’s costs: “Ningbo Master found that
it mistakenly included consumption amounts for July
2018, which is outside the [period of investigation], for
several inputs: drawing oil, cleaning agent[,] and oil
removal agent.” 	Id. 	In short, with this correction,
Ningbo Master was able to adjust its costs, which in
turn could (and did) directly result in a lower dumping
margin. 18
Commerce’s verification memorandum stated that
Ningbo Master provided supporting documentation for
its corrections and that Commerce “verified the correc-
tions during the course of conducting the verification
procedures.” Id. at 667. Notably, the memorandum
does not indicate how Commerce verified any of the
corrections.
18 After Ningbo Master submitted its corrections, Com-
merce asked the company to submit “a revised . . . factors-
of-production 	database 	incorporating 	the 	changes,”
ECF 28, at 668, which confirms the significance of the cor-
rection to the company’s costs.
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Court No. 20-00008 	Page 38
Commerce’s final decision states—in the passive
voice, the last refuge for evading accountability—that
Ningbo Master’s corrections “were subject to verifica-
tion,” ECF 17-5, at 16 (emphasis added), but then
states that “[a]t verification, [Commerce] chose other
inputs to examine and we found no discrepancies.”
ECF 17-5, at 16 (emphasis added). Indeed, the verifi-
cation memorandum confirms that Commerce chose to
examine other material inputs during verification—
not the corrected material inputs of drawing oil, clean-
ing agent, and oil removal agent that American Keg
identifies as dispositive. See ECF 28, at 671–74 (iden-
tifying in granular detail the specific “material inputs”
verified and manner of verification).
B. Analysis
American Keg argues that “Commerce failed to ver-
ify those changes in any way” and contends that “Com-
merce neglected to verify or confirm that the claimed
consumption adjustments were accurate.” ECF 21,
at 32 (citing ECF 28, at 647; ECF 28, at 671–74).
American Keg further argues that in view of Com-
merce’s statutory obligation to “verify all information
relied upon,” 19 U.S.C. § 1677m(i), the Department
was required to verify the corrections insofar as they
were dispositive. Here, neither the government nor
Ningbo Master disputes that the corrections to the ma-
terial inputs of the factors of production were disposi-
tive in allowing Ningbo Master to clear the de minimis
threshold.
Consistent with the Court’s understanding of the
record, the government all but admits that Commerce
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Court No. 20-00008 	Page 39
didn’t verify Ningbo Master’s corrections because (in
the government’s view) there was no requirement to
do so. See ECF 22, at 22 (arguing that “Commerce ver-
ified the record that it determined was appropriate
and found no discrepancies. No more was required.”).
According to the government, because Ningbo Mas-
ter’s corrections “were subject to Commerce’s verifica-
tion”—meaning, in theory they could have been veri-
fied had Commerce opted to do so—the Department
satisfied 	its 	verification 	obligations. 	Id. 	(emphasis
added).
Ningbo Master, on the other hand, argues that “the
verifiers did closely verify the minor corrections as pre-
sented on site,” ECF 25, at 14, but cites nothing in the
record demonstrating that proposition beyond the ver-
ification 	memorandum’s 	statement 	that 	Commerce
verified the corrections, id. at 14–15 (citing ECF 28, at
667). As discussed above, that statement is belied by
both Commerce’s final decision—which indicates that
the Department chose to verify “other inputs”—and
the report’s granular description of Commerce’s verifi-
cation of inputs that did not include the corrected in-
puts of drawing oil, cleaning agent, and oil removal
agent. See ECF 28, at 671–74.
The government and Ningbo Master correctly ar-
gue that Commerce has wide discretion in determining
what record information to verify, and that the De-
partment is under no obligation to verify every piece of
information supplied to it. See ECF 22, at 30–31 (gov-
ernment); ECF 24, at 16–17 (Ningbo Master). Given
that wide latitude, the Court’s limited role is to “eval-
uate for reasonableness the way in which Commerce
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 39 of 57
Court No. 20-00008 	Page 40
chose to interpret the verification requirement.” Mi-
cron Tech., Inc. v. United States, 117 F.3d 1386, 1397
(Fed. Cir. 1997).
Here, Commerce preliminarily decided to impose a
2.01 percent antidumping margin on Ningbo Master—
on the knife’s edge of the de minimis threshold of two
percent. On the first day of Commerce’s verification in
China, Ningbo Master presented the Department with
its list of “minor corrections” that included—in addi-
tion to such trivial corrections as the name of the port
of entry, see ECF 28, at 667—changes in values of ma-
terial inputs to the factors of production that adjusted
the 	company’s 	costs. 	Neither 	the 	government 	nor
Ningbo Master disputes American Keg’s contention—
which 	the 	record 	confirms—that 	this 	adjustment
flipped the investigation’s outcome by lowering Ningbo
Master’s margin beneath the de minimis threshold.
See 	ECF 	21, 	at 	16 	(American 	Keg’s 	contention);
ECF 28, at 734 (stating that Commerce modified the
preliminary decision by using new databases that in-
corporated Ningbo Master’s corrective material in or-
der to make the final decision); ECF 17-5, at 15 (sum-
marizing 	parties’ 	arguments 	that 	Ningbo 	Master’s
preliminary margin of 2.01 percent could easily move
below de minimis threshold if Commerce accepted cor-
rections); 84 Fed. Reg. at 57,011 (stating that Ningbo
Master’s margin was de minimis and thus was set at
zero).
Because (1) Ningbo Master’s corrections to its ma-
terial inputs of drawing oil, cleaning agent, and oil re-
moval agent were dispositive to the outcome of Com-
merce’s final decision, and (2) Ningbo Master tendered
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 40 of 57
Court No. 20-00008 	Page 41
these corrections after Commerce’s preliminary deci-
sion, the Court concludes that Commerce unreasona-
bly 	failed 	to 	verify 	those 	corrections 	and 	thereby
abused 	its 	discretion. 	Cf. 	Smith 	Corona 	Corp. 	v.
United States, 771 F. Supp. 389, 398 (CIT 1991) (“Ver-
ification tests the facts upon which conclusions are to
be drawn and indicates whether they will reflect an
acceptable degree of certainty,” and therefore Com-
merce has “a statutory obligation to properly verify
those facts which it finds dispositive.”).
While the Court recognizes that Commerce need
not verify everything in the administrative record, see
U.S. Steel, 953 F. Supp. 2d at 1348, the Court con-
cludes that at least in the circumstances presented
here, 	it 	was 	unreasonable 	for 	Commerce 	to 	take
Ningbo Master’s corrections on faith. A respondent
that waits until after Commerce issues a preliminary
decision has the opportunity and the motive to engage
in informed gamesmanship in response to that deci-
sion. To reasonably guard against that possibility,
Commerce 	should—to 	borrow 	an 	expression 	from
President Reagan—trust but verify such corrections at
least where, as here, such corrections are dispositive.
On remand, Commerce must reconsider its verifi-
cation of Ningbo Master’s corrections to its material
inputs and, if necessary, recalculate Ningbo Master’s
rate. In addition, because other successful separate
rate applicants automatically receive the same rate
that Commerce calculates for Ningbo Master as the
mandatory respondent, insofar as Commerce recalcu-
lates that rate, the Department must also assign it to
the successful separate rate applicants.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 41 of 57
Court No. 20-00008 	Page 42
III. 	Separate rate eligibility for Jingye and
Ulix19
American Keg asks the Court to remand Com-
merce’s decision to grant separate rate status to re-
spondents Jingye and Ulix, contending that they failed
to rebut the presumption that they are under state
control. See ECF 21, at 35–37.
Insofar as the Court can determine, there are three
separate documents in the record in which Commerce
addressed the separate rate issue: (1) a preliminary
decision memorandum, ECF 28, at 610 et seq.; (2) a
subsequent separate rate memorandum, id. at 737 et
seq.; and (3) the final issues and decision memoran-
dum, ECF 17-5. 20 While the preliminary decision was
just that—preliminary—the separate rate memoran-
dum referred back to it. See ECF 28, at 739 (“The pe-
titioner’s arguments provide no evidentiary basis for
reversing our decision in the Preliminary Determina-
tion that Jingye is eligible for a separate rate.”) and
740 (“[W]e continue to find that the information on the
record demonstrates that Ulix’s [sic] is not affiliated
with its U.S. customer [and] we continue to find that
Ulix is eligible for a separate rate.”) (emphasis added).
The first document conflated Commerce’s analysis
as to both entities, while the latter two documents
19 This discussion corresponds to Commerce’s findings in
ECF 17-5, at 21–23.
20 In this opinion, the Court refers to the preliminary deci-
sion memorandum as the “preliminary decision” and the
issues and decision memorandum as the “final decision.”
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 42 of 57
Court No. 20-00008 	Page 43
addressed each entity separately. Accordingly, in or-
der to track Commerce’s analysis, the Court first sum-
marizes the preliminary decision applicable to both en-
tities and then discusses each applicant separately.
A. The preliminary decision’s discussion of
both separate rate applicants
Commerce’s preliminary decision did not address
any evidence relating specifically to Jingye or Ulix. In-
stead, it conflated the discussion of both entities and
asserted in conclusory fashion that both had estab-
lished the absence of de jure and de facto state con-
trol—the dual tests that Commerce requires separate
rate applicants to satisfy.
Before this Court, American Keg appears to dispute
whether both Jingye and Ulix established the absence
of de facto state control. 21 As to that issue, Commerce
found as follows:
The evidence placed on the record of this inves-
tigation supports a preliminary finding of an ab-
sence of de facto government control based on
record statements and supporting documenta-
21 American Keg’s opening brief asserts that Commerce
overlooked “material omissions and discounted evidence
fairly detracting from its ultimate conclusion that these
companies were free of de facto and de jure government
control,” ECF 21, at 37, but American Keg makes no fur-
ther reference to “de jure government control” or the appli-
cable test for such control. Thus, the Court concludes that
American Keg has abandoned any challenge to Commerce’s
determination that Jingye and Ulix were free from de jure
state control.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 43 of 57
Court No. 20-00008 	Page 44
tion showing that the companies: (1) set their
own prices independent of the government and
without the approval of a government authority;
(2) have the authority to negotiate and sign con-
tracts and other agreements; (3) maintain au-
tonomy from the government in making deci-
sions regarding the selection of management;
and (4) retain the proceeds of their respective ex-
port sales and make independent decisions re-
garding disposition of profits or financing of
losses.
Id. at 623–24. 22 The only relevant citation in support
of this paragraph was a vague blanket citation in a
footnote to “Jingye’s and Ulix’s separate rate applica-
tions dated November 21, 2018.” Id. at 624 n.93.
Commerce further stated that “the evidence placed
on the record of this investigation with respect to
[Jingye and Ulix] demonstrates an absence of govern-
ment 	control 	. 	. 	. 	. 	Accordingly, 	we 	preliminarily
grant[ ] separate rates to the separate rate applicants
. . . .” Id. at 624.
B. Ulix
The parties appear to agree that whether Ulix
demonstrated the absence of de facto state control
turns on whether the record “establishes that Ulix con-
ducted 	an 	independent 	price 	negotiation 	with 	its
22 The parties agree, and therefore the Court assumes, that
a separate rate applicant must demonstrate the four crite-
ria identified by Commerce above to establish the absence
of de facto state control.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 44 of 57
Court No. 20-00008 	Page 45
unaffiliated U.S. customer.” ECF 17-5, at 23. As dis-
cussed below, the parties further narrow the question
to whether Ulix has demonstrated that its U.S. cus-
tomer is unaffiliated, without any discussion or men-
tion whatsoever of whether Ulix independently sets its
own prices. Because the parties have so narrowed the
question, the Court assumes that resolution of Ameri-
can Keg’s challenge to Commerce’s separate rate de-
termination as to Ulix turns on whether the U.S. cus-
tomer is unaffiliated. 23
1. Separate rate memorandum
Commerce’s separate rate memorandum summa-
rized the parties’ arguments as to Ulix but failed to
cite any evidence. Commerce then stated its findings
as to Ulix as follows:
The record does not support a finding that there
exists an affiliation between Ulix and its U.S.
customer that the petitioner purports exists.
The record establishes that the owner of the un-
affiliated U.S. customer also owns another U.S.
company. However, the record establishes that
there is no relationship between Ulix[ ]and the
individual who owns both [U.S. companies] and
thus there is no basis to find affiliation between
Ulix and its U.S. customer or its U.S. customer’s
affiliate. We agree with Ulix that the fact that
23 The parties fail to clearly tie this “unaffiliated customer”
standard to Commerce’s four-part test for de facto control,
see above note 22. Nevertheless, because the parties agree
as to the applicable standard, the Court will apply it.
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Court No. 20-00008 	Page 46
the companies share part of their names is not
an indicator of affiliation. We continue to find
that the information on the record demonstrates
that Ulix’s [sic] is not affiliated with its U.S. cus-
tomer. Accordingly, we continue to find that Ulix
is eligible for a separate rate.
ECF 28, at 740. This paragraph lacked any citations
to the administrative record, any discussion of Ameri-
can Keg’s evidence, or any explanation of why the
agency found that evidence unconvincing.
2. Final decision
Commerce’s final decision summarized the parties’
arguments as to Ulix and then stated as follows:
We continue to find that the evidence placed on
the record of this investigation supports a find-
ing of the absence of de facto government control
of Ulix based on record statements and support-
ing documents. Specifically, we find that the rec-
ord establishes that Ulix conducted an inde-
pendent price negotiation with its unaffiliated
U.S. 	customer. 	Accordingly, 	we 	continue 	to
grant a separate rate to applicant Ulix. Because
of the proprietary nature of the reasoning be-
hind our position, see the Separate Rate Analy-
sis Memorandum for a full discussion of the is-
sue.
ECF 17-5, at 23. Here, Commerce cited specific por-
tions of Ulix’s evidence but did so without analysis.
Commerce still did not cite any of American Keg’s evi-
dence.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 46 of 57
Court No. 20-00008 	Page 47
3. The parties’ arguments
The government’s argument defending Commerce’s
findings as to Ulix is essentially confined to the follow-
ing two sentences in its brief:
Commerce determined that the record does not
support the conclusion that Ulix and its U.S.
customer 	were 	affiliated. 	Specifically, 	Com-
merce 	explained 	that 	“the record establishes
that Ulix conducted an independent price nego-
tiation with its unaffiliated U.S. customer,” and
the record supports a normal customer relation-
ship between Ulix and its U.S. customer.
ECF 23, at 35 (citations to the administrative record
omitted).
American Keg, on the other hand, argues that the
record contains ample evidence demonstrating that
Ulix may be affiliated with the U.S. customer in ques-
tion but that Commerce never addressed any of that
evidence and Ulix responded solely with arguments,
rather than actual evidence. ECF 21, at 37–41. In re-
sponse, the government argues that American Keg’s
position in this case amounts to demanding that Com-
merce prove a negative. ECF 23, at 36–37. 24
24 Although Ulix participated in the administrative pro-
ceedings before Commerce, it chose not to intervene here to
defend Commerce’s decision.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 47 of 57
Court No. 20-00008 	Page 48
4. Analysis
In reviewing Commerce’s decision, “the Court must
consider, inter alia, whether the Department has ex-
amined the relevant data and articulated a satisfac-
tory explanation for its action including a rational con-
nection between the facts found and the choice made.”
Adv. Tech. & Materials Co. v. United States, 35 CIT
1380, 1387 (2011) (cleaned up) (citing Motor Veh. Mfrs.
Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29,
43 (1983)). “The agency must offer an explanation of
the decision that is clear enough to enable judicial re-
view, and cannot leave vital questions, raised by com-
ments which are of cogent materiality, completely un-
answered.” Id. (cleaned up) (citing United States v.
Nova Scotia Food Prods., 568 F.2d 240, 252 (2d Cir.
1977)).
Given these principles, it is not enough for Com-
merce simply to “determine,” as it did here, that the
record does not support a particular conclusion with-
out addressing the evidence both in support of and in
derogation of that conclusion, and it is likewise not
enough for Commerce to “continue to find” something
that is unsupported by a discussion of the evidence in
the first instance. Although Commerce need not ad-
dress every single piece of evidence, “it must address
significant arguments and evidence which seriously
undermines its reasoning and conclusions.” Altx, Inc.
v. United States, 167 F. Supp. 2d 1353, 1374 (CIT
2001).
Here, Commerce simply failed to address American
Keg’s evidence that the U.S. customer was affiliated
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Court No. 20-00008 	Page 49
with Ulix. That evidence fairly detracts from Com-
merce’s conclusion and, therefore, must be addressed
on remand. “An agency determination may not be sus-
tained without considering contradictory evidence or
evidence from which conflicting inferences could be
drawn.” DAK Ams. LLC v. United States, 456 F. Supp.
3d 1340, 1352 (CIT 2020) (cleaned up) (citing Univer-
sal Camera Corp. v. NLRB, 340 U.S. 474, 487 (1951)).
The Court must therefore remand for Commerce to
provide such an explanation. Cf. Adv. Tech. & Materi-
als Co. v. United States, 885 F. Supp. 2d 1343, 1362
(CIT 2012) (remanding for Commerce to address peti-
tioner’s separate rate arguments).
Although the government argues that “American
Keg would have the Court hold that Commerce’s de-
termination is not supported by substantial evidence
because Commerce did not identify evidence that an
affiliation did not exist,” ECF 23, at 36, the Court’s re-
mand is not based on Commerce’s failure to identify
evidence to support its conclusion, but rather on Com-
merce’s failure to address the evidence in the adminis-
trative record to explain why it found American Keg’s
submissions unconvincing. That is, while Commerce
claimed to have “considered and analyzed the record
evidence,” id., the Court is required to remand because
the administrative record does not reflect that Com-
merce actually did so. 25 Again, this is why it matters
25 Similarly, the government attempts to wave away Amer-
ican Keg’s arguments by stating that “the evidence of a ‘po-
tential affiliation’ is nothing more than unsubstantiated
speculation.” ECF 23, at 37. While it is true that a “poten-
tial affiliation” is not the same thing as a proven affiliation
between Ulix and its American customer, it is also true
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Court No. 20-00008 	Page 50
that Commerce’s preliminary decision failed to discuss
the evidence: To the extent the later decisions were
based on the preliminary decision, they cannot stand
on their own when the preliminary decision was defi-
cient—Commerce cannot simply point back to a defi-
cient preliminary decision and say that it “continues”
to make the same finding.
C. Jingye
Before Commerce, American Keg argued that the
record demonstrated that Jingye was an affiliate or
successor-in-interest 	to 	another 	Chinese 	company,
Guangzhou 	Heshun 	Machinery 	Co., 	Ltd. 	(“GZ
Heshun”), and that as a result Commerce was obli-
gated to investigate whether GZ Heshun was con-
trolled by the Chinese government for purposes of
Jingye’s separate rate status.
1. Separate rate memorandum
Commerce’s separate rate memorandum addressed
Jingye as follows:
Finally, we disagree with [American Keg] that
Jingye failed to provide information regarding
. . . GZ Heshun Keg. In this instance, additional
information was not required as Jingye is the
separate rate applicant; the record established
that GZ Heshun Keg had no legal ties to Jingye
and it ceased operations in 2015, well before the
that if American Keg introduced evidence demonstrating a
potential affiliation, Commerce was obligated to do more
than ignore it.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 50 of 57
Court No. 20-00008 	Page 51
[period of investigation] in this investigation.
The petitioner’s arguments provide no eviden-
tiary basis for reversing our decision in the Pre-
liminary Determination that Jingye is eligible
for 	a 	separate 	rate. 	Accordingly, 	as 	demon-
strated by the record, we continue to find an ab-
sence of de jure and de facto government control
under the criteria identified in Sparklers and
Silicon 	Carbide, 	and, 	therefore, 	continue 	to
grant a separate rate to Jingye.
ECF 28, at 739 (footnote references omitted). As sup-
port for the second sentence, Commerce cited its final
decision (ECF 17-5) and referred to it as containing
“Commerce’s consistent position with respect to this
issue.” The Court discusses that document below.
2. Final decision
Commerce’s final decision included a summary of
the parties’ contentions about Jingye and then stated
as follows:
We continue to find that the evidence on the rec-
ord of this investigation supports a finding of the
absence of de facto and de jure government con-
trol for Jingye based on record statements and
supporting documentation. . . .
With respect to GZ Heshun Keg, the record
demonstrates that this company is a separate le-
gal entity from Jingye. GZ Heshun Keg applied
for a registration cancellation in August 2015
and ceased operations before the [period of in-
vestigation]. Because Jingye is the exporter and
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 51 of 57
Court No. 20-00008 	Page 52
separate rate applicant during the [period of in-
vestigation], we determined it unnecessary to
examine GZ Heshun Keg and its management
for evidence of government control. . . . Accord-
ingly, we continue to find Jingye has demon-
strated its eligibility for a separate rate.
ECF 17-5, at 22 (footnote reference omitted). Com-
merce cited Jingye’s supplemental questionnaire re-
sponse in support of its separate rate application as
documentation for the finding that Heshun ceased op-
erations.
3. The parties’ arguments
American Keg argues that Commerce failed to ad-
dress evidence in the administrative record that “left
open the possibility that Jingye may be subject to gov-
ernment control through its relationship with Guang-
zhou Heshun Machinery Co., Ltd.” ECF 21, at 41. In
support of this theory, which the Court understands to
implicate Commerce’s presumption of de facto govern-
mental control, American Keg asserts two related lines
of attack.
First, American Keg argues that the administrative
record shows that “Jingye was an affiliate of or succes-
sor-in-interest to GZ Heshun,” id., such that Jingye
needed to produce evidence documenting GZ Heshun’s
ownership, id. at 42–43. According to American Keg,
the record shows that (1) Jingye’s contact e-mail was
the e-mail address for a sales employee of GZ Heshun,
who was also sales manager for Jingye, see id. at 41;
(2) 	Jingye 	promoted 	itself 	as 	“emerging” 	from 	GZ
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 52 of 57
Court No. 20-00008 	Page 53
Heshun and advertised production standards certifi-
cations antedating Jingye’s 2014 incorporation, id.;
(3) Jingye succeeded as supplier to one of GZ Heshun’s
customers, id.; and (4) GZ Heshun continued to main-
tain an online marketing presence after its ostensible
2015 dissolution, id. at 42. American Keg further com-
plains that in response to a question about the “na-
ture” of Jingye’s relationship with GZ Heshun and
whether the latter was involved in the former’s opera-
tions in the U.S., Jingye offered no information beyond
GZ Heshun ceasing operations in 2015. Id.
Second, 	American 	Keg 	argues 	that 	the 	record
demonstrates a [[ 	]] relationship between the
owner of GZ Heshun and officers of Jingye. ECF 20, at
41–42. Specifically, American Keg points to the fact
that the owner of GZ Heshun was the [[
]]. Id. at 42. American Keg further
argues 	that 	Commerce 	should 	have 	inquired 	into
whether GZ Heshun’s owner had any de facto involve-
ment in Jingye’s operations because the record is si-
lent as to whether GZ Heshun’s owner had or has a
relationship with the Chinese government. Id. at 43.
The government repeats Commerce’s reasoning, ar-
guing that because GZ Heshun is both defunct and le-
gally independent of Jingye, any relationship that GZ
Heshun’s management may have had with the Chi-
nese government is irrelevant. ECF 23, at 37–39. The
government further argues that the [[ 	]] rela-
tionship 	that 	GZ 	Heshun’s 	owner 	has 	to 	Jingye’s
[[
]] is irrelevant. ECF 22, at 38.
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Court No. 20-00008 	Page 54
For its part, Jingye—in addition to repeating the
government’s arguments—observes that the record in-
dicates the company certified to Commerce that “none
of Jingye’s shareholders, managers, or director mem-
bers has any relationship with” the Chinese govern-
ment at any level. ECF 25, at 21. Jingye further char-
acterizes as “extreme” the proposition that Commerce
is required to probe the governmental ties of third par-
ties that have a connection with owners or manage-
ment of a separate rate applicant. Id. at 22.
4. Analysis
As noted above, the parties agree as to the applica-
ble four-part test for de facto control. As described by
American Keg, that test asks
1. Whether the prices are set by, or are subject
to the approval of, a government agency,
2. Whether the respondent has authority to ne-
gotiate and sign contracts and other agree-
ments,
3. Whether the respondent has autonomy from
the government in making decisions regard-
ing the selection of management, and
4. Whether the respondent retains the proceeds
of its export sales and makes independent de-
cisions regarding the disposition of profits or
financing losses.
ECF 21, at 36.
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 54 of 57
Court No. 20-00008 	Page 55
Commerce determined that the defunct GZ Heshun
was irrelevant to whether Jingye was subject to de
facto control under this four-part test. Here, American
Keg has not explained how the defunct GZ Heshun is
relevant under that test, even if Jingye—a separate en-
tity—is the successor-in-interest. The Court concludes
that Commerce could reasonably find, in view of the
applicable four-part de facto control test, that this in-
formation was irrelevant to its determination on that
issue.
Similarly, 	the 	Court 	concludes 	that 	Commerce
could reasonably find that questions about the [[
]] relationship between the former owner of GZ
Heshun and [[ 	]] Jingye
are irrelevant under the applicable test, as American
Keg has not explained how that information could
have any relevance. The relevant question before Com-
merce was whether Jingye “has autonomy from the
government in making decisions regarding the selec-
tion of management”—not whether third parties some-
how indirectly connected to Jingye have such auton-
omy. On the relevant question, the record here indi-
cates that “none of Jingye’s shareholders, managers,
or director members has any relationship with” the
Chinese government at any level. ECF 25, at 21.
In short, Commerce’s decision that Jingye is eligi-
ble for separate rate status is supported by substantial
evidence, and American Keg’s arguments to the con-
trary do not persuade the Court otherwise. The Court
therefore sustains that determination.
* * *
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 55 of 57
Court No. 20-00008 	Page 56
Order
For all the foregoing reasons, the Court remands
this matter to Commerce for further proceedings con-
sistent with this opinion. Accordingly, it is hereby
ORDERED that New American Keg’s motion for
judgment on 	the 	agency 	record 	is 	GRANTED 	IN
PART and DENIED IN PART, and it is further
ORDERED that Commerce’s decision to rely on
surrogate value data from Malaysia to value the labor
factor of production in calculating Ningbo Master’s
rate is REMANDED for further consideration con-
sistent with the foregoing opinion and for recalculation
of Ningbo Master’s separate rate if necessary; and it is
further
ORDERED that Commerce’s ostensible verifica-
tion of corrective material submitted by Ningbo Mas-
ter is likewise REMANDED for further consideration
consistent with the foregoing opinion and recalcula-
tion of Ningbo Master’s separate rate if necessary; and
it is further
ORDERED that Commerce’s decision to grant sep-
arate rate status to Guangzhou Ulix Industrial &
Trading Co., Ltd., is REMANDED for further consid-
eration consistent with the foregoing opinion; and it is
further
ORDERED this case will proceed with the follow-
ing schedule:
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 56 of 57
Court No. 20-00008 	Page 57
1. Commerce must file its remand determina-
tion on or before 120 days after the date of
entry of this opinion and order;
2. Commerce must file the administrative rec-
ord on or before 14 days after the date on
which it files the remand determination; and
3. The Court will issue a scheduling order after
Commerce files the administrative record.
Dated: 	March 23, 2021 	/s/ M. Miller Baker
New York, NY 	M. Miller Baker, Judge
Case 1:20-cv-00008-MMB Document 38 Filed 03/30/21 Page 57 of 57

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