Changzhou Hawd Flooring Co. v. United States, 2015 WL 294628

Background

Commerce conducted an antidumping (AD) investigation of multilayered wood flooring from China; three mandatory respondents were individually investigated and initially all had zero AD margins on remand.
110 exporters did not respond to Commerce’s quantity-and-value questionnaire and were treated as part of the PRC-wide entity; 74 companies (including the Plaintiffs) obtained separate-rate status.
After the first administrative review produced non-de minimis rates for some separate-rate companies, Commerce (on remand) inferred the investigation-wide separate rate was more than de minimis and assigned seven Plaintiffs the cash-deposit rates calculated in that first administrative review (subject to the provisional-deposit cap).
One Plaintiff, Changzhou Hawd, certified no shipments in the first review and thus had no calculated rate; Commerce initiated a full individual investigation of Changzhou Hawd.
Plaintiffs challenged Commerce’s methodology: they argued Commerce should have calculated a de minimis separate rate (or at least a specific investigational rate) rather than inferring a more-than-de-minimis rate or launching a new full investigation.
The Court upheld Commerce’s inference that the separate rate was more than de minimis and its refusal to calculate a new investigational rate for seven Plaintiffs, but found Commerce’s decision to commence a full individual investigation of Changzhou Hawd at this late stage arbitrary and capricious and remanded that aspect.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Commerce must calculate a specific separate rate when all individually investigated margins are zero	Plaintiffs: Commerce must calculate a de minimis separate rate for the investigation	U.S.: Statute allows Commerce to use "any reasonable method," including inferring more-than-de-minimis rate and applying first-review rates	Court: Commerce reasonably inferred a more-than-de-minimis separate rate and could rely on first-review rates; affirmed
Whether Commerce permissibly used first administrative-review rates (cash-deposit rates) instead of calculating an investigational rate	Plaintiffs: Using first-review rates frustrates requirement that rates reflect economic reality	U.S.: First-review calculated rates comport with economic reality and will govern liquidation, making new investigational rates unnecessary	Court: Using first-review rates is reasonable and administratively efficient; affirmed
Whether Commerce’s inference that non-cooperating exporters caused the separate rate to be above de minimis is supported	Plaintiffs: The inference is speculative and insufficiently tied to record	U.S.: Non-cooperation permits a rational-actor inference that nonrespondents would seek lower rates, justifying inference of more-than-de-minimis margins	Court: The inference (corroborated by first-review results) is reasonable and supported by record; affirmed
Whether Commerce permissibly initiated a full individual investigation of Changzhou Hawd	Plaintiffs: A full investigation is arbitrary and inconsistent with Commerce’s limited-resource justifications and prior denials of other investigations	U.S.: Full investigation is necessary to derive a rate reflective of Changzhou Hawd’s economic reality	Court: Commerce’s decision to open a late full investigation of Changzhou Hawd was arbitrary and capricious due to internal inconsistency; remanded

Key Cases Cited

Bestpak v. United States, 716 F.3d 1370 (Fed. Cir. 2013) ("any reasonable method" standard for separate-rate calculation)
Eurodif S.A. v. United States, 555 U.S. 305 (2009) (deference to agency interpretations and focus on economic reality)
Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330 (Fed. Cir. 2002) (rational-actor inference for non-cooperation)
Rhone Poulenc, Inc. v. United States, 899 F.2d 1185 (Fed. Cir. 1990) (treatment of non-cooperation in antidumping proceedings)
KYD, Inc. v. United States, 607 F.3d 760 (Fed. Cir. 2010) (AFA’s purpose to incentivize cooperation)
Fine Furniture (Shanghai) Ltd. v. United States, 748 F.3d 1365 (Fed. Cir. 2014) (deference to Commerce where statute ambiguous)
Gallant Ocean (Thailand) Co. v. United States, 602 F.3d 1319 (Fed. Cir. 2010) (AFA must relate to respondent’s actual dumping margin)
Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29 (1983) (arbitrary-and-capricious standard)
Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281 (1974) (agency must articulate rational connection between facts and decision)
Consolo v. Federal Maritime Commission, 383 U.S. 607 (1966) (substantial evidence standard review)