CHANGZHOU WUJIN FINE CHEMICAL FACTORY CO., LTD., Plaintiff, and Jiangsu Jianghai Chemical Group, Ltd., Plaintiff-Appellant, v. UNITED STATES, Defendant-Appellee, and Compass Chemical International, LLC, Defendant-Appellee.
No. 2011-1080
United States Court of Appeals, Federal Circuit.
Dec. 17, 2012.
1367
In addition to relying on Bard, the Highmark majority suggests that Powell v. Home Depot, 663 F.3d 1221, 1236 (Fed. Cir. 2011) supports its newly-adopted standard of review. This reliance is misplaced because Powell‘s actual treatment of the
1296, 1312 (Fed. Cir. 2010) (citing In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc)).
5. The Seagate decision “left it to future cases to further develop the application of [the willful infringement] standard.” 497 F.3d at 1371. While I share Judge Mayer‘s concerns that Bard was wrongly decided pursuant to a three judge panel unilaterally shifting the appropriate standard of review, see Highmark, 687 F.3d at 1321, I note that at least Bard attempted to bolster its reasoning with a recent
Antonia R. Soares, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Ahran Kang McCloskey, Office of Chief Counsel for Import Administration, United States Department of Commerce, of Washington, DC.
Jeffrey S. Levin, Mondial Trade Compliance Services & Solutions Inc., of Bethesda, Maryland, argued for defendant-appellee Compass Chemical International, LLC.
Before DYK, CLEVENGER, and REYNA, Circuit Judges.
Opinion for the Court filed by Circuit Judge DYK. Dissenting opinion filed by Circuit Judge REYNA.
Jiangsu Jianghai Chemical Group, Ltd. (“Jiangsu Jianghai“) appeals a decision of the United States Court of International Trade that the Department of Commerce (“Commerce“) did not exceed the scope of a remand order when it recalculated the U.S. price and that the explanation given by Commerce for its calculation of the separate rate on remand was not unreasonable. We affirm in part, and reverse and remand in part.
BACKGROUND
When merchandise is sold in the United States at less than fair value, Commerce is authorized by statute to impose antidumping duties. These duties are equal to the amount by which the price of the merchandise in the exporting country (“normal value“) exceeds the price of the merchandise in the United States (“export price” or “U.S. price.“). See
This underlying proceeding involves an investigation of imports of 1-hydroxyethylidene-1, 1-diphosphonic acid (“HEDP“) from the People‘s Republic of China, initiated in response to a petition filed by Compass Chemical International, LLC (“Compass Chemical“). Commerce sent initial quantity and value (“Q & V“) questionnaires to ten known HEDP exporters and producers identified in the petition.
The questionnaire responses indicated that BWA was one of the largest exporters of HEDP from China to the U.S. during the period of investigation. However, Commerce did not select BWA as a mandatory respondent because BWA refused to permit public disclosure of its supplier, and was therefore ineligible to be individually investigated. Commerce instead selected Wujin Water and Kewei as the mandatory respondents. Kewei subsequently notified Commerce that it would no longer participate in the investigation, leaving Wujin Water as the only cooperating mandatory respondent. Wujin Water, Wujin Fine Chemical, and Jiangsu Jianghai all
On October 21, 2008, Commerce published a preliminary determination that HEDP from China was, or was likely to be, sold in the United States at less than fair value, and assigned antidumping rates to Chinese producers of HEDP.1 Preliminary Determination 1. Cooperating mandatory respondent Wujin Water received a preliminary rate of 24.30%, based on the data it had submitted to Commerce. Id. When Commerce determines that a respondent has not cooperated to the best of its ability in supplying Commerce with requested information, Commerce may subject that respondent to “adverse facts available” (“AFA“) and employ an inference adverse to the respondent‘s interests when selecting among the facts available to determine its rate. See
Turning to Jiangsu Jianghai and Wujin Fine Chemical, Commerce determined that they had provided sufficient evidence of their independence from state control and qualified for a separate, company-specific rate. For preliminary purposes, Commerce assigned them “a weighted-average margin based on the experience of mandatory respondents and excluding any de minimis or zero rates or rates based on [AFA]“. 73 Fed. Reg. at 62,473; see also
Wujin Water provided Commerce with its final data submission in December of 2008. As a result, Commerce reduced Wujin Water‘s margin from 24.30% to de min-
Under the trade statute, the separate rate for separate rate respondents like Wujin Fine Chemical and Jiangsu Jianghai is normally “an amount equal to the weighted average of the estimated weighted average dumping margins established for exporters and producers individually investigated, excluding any zero and de minimis margins, and any margins determined entirely [on the basis of AFA].”
because there are no rates other than de minimis [i.e., Wujin Water‘s] or those based on AFA [i.e., Kewei‘s], we have determined to take a simple average of the AFA and the de minimis rate calculated for Wujin Water as a reasonable method for purposes of determining the rate assigned to Wujin Fine Chemical and Jiangsu Jianghai.
74 Fed.Reg. at 10,546. Consequently, Wujin Fine Chemical and Jiangsu Jianghai were assigned a rate of 36.21%, representing a simple average of Kewei‘s 72.42% rate and Wujin Water‘s de minimis rate. Id. at 10,547.
On June 25, 2009, Jiangsu Jianghai and Wujin Fine Chemical filed an action in the Court of International Trade, in which they challenged Commerce‘s corroboration of the AFA rate used to calculate their separate rate, as well as the financial ratios and surrogate values used to calculate the AFA rate. They argued, inter alia, that using a flawed AFA rate in calculating a separate rate “would, in essence, punish a fully cooperative respondent and apply adverse inferences in the absence of any finding of a lack of cooperation.” Mot. J. Agency R. at 16, Changzhou Wujin Fine Chem. Factory Co. v. United States, No. 09-CV-0216 (Ct. Int‘l Trade Sept. 21, 2009), ECF No. 25. The court granted the government‘s request for a partial voluntary remand, and issued an order authorizing Commerce
to reconsider the separate rate amount after examining the following issues []: (i) whether Commerce corroborated the [AFA] rate upon which it relied in calculating the separate rate and (ii) whether Commerce used the proper financial ratios and the proper surrogate value for Phosphorus Trichloride and steam in calculating the [AFA] rate Commerce used as a basis for the separate rate. Changzhou Wujin Fine Chem. Factory Co. v. United States, No. 09-CV-0216, 2010 Ct. Intl. Trade LEXIS 108, at *1 (Feb. 8, 2010) (“Remand Order“). The court retained jurisdiction pending the remand. Id. at *2.
On remand, Commerce abandoned the AFA rate based on the petition, because it
In their comments to Commerce on its draft remand results, Wujin Fine Chemical and Jiangsu Jianghai argued that Commerce should not base the hypothetical AFA rate on BWA‘s data. See Comments on Draft Remand Determination by Wujin Fine Chemical & Jiangsu Jianghai at 6-8, Changzhou Wujin Fine Chem. Factory Co. v. United States, No. 09-CV-0216 (Ct. Int‘l Trade Mar. 31, 2010), ECF No. 47-5. In the Final Remand Redetermination, Commerce stated that any other data-including the mandatory respondents’ data, or an average of BWA‘s data with those of any other respondent-would produce a hypothetical AFA rate of zero. According to Commerce, this would be unacceptable, because
[a]n AFA rate of zero would not be sufficiently adverse as to effectuate the purpose of the facts available rule to induce respondents to provide the Department with complete and accurate information in a timely manner and would not ensure that uncooperative parties do not obtain a more favorable result by failing to cooperate than if they had cooperated fully.
Final Remand Redetermination 16.
Following the Final Remand Redetermination, the Court of International Trade considered the parties’ comments on the remand results. The appellant objected that Commerce‘s deterrence rationale was inappropriate under the circumstances:
The ultimate objective in this case is to calculate a margin for the Plaintiffs using a reasonable method. The most appropriate, if not the only appropriate method, is to use the Q & V [data] of the [cooperating] plaintiffs.... The Department rejected the use of this data alleging that it would result in an AFA rate which would be zero and that a rate of zero would not act as a deterrent. Plaintiffs note that the new ‘AFA’ rate would not be used for any purpose other than assigning a rate to [cooperating separate rate applicants].... [A]s discussed above, deterrence is not the only factor involved in calculating an AFA rate, and deterrence is never a factor in calculating a non-AFA rate.
The Court of International Trade affirmed Commerce‘s remand results. Changzhou Wujin Fine Chem. Factory Co. v. United States, No. 09-CV-0216, 2010 Ct. Intl. Trade LEXIS 96, at *15 (Aug. 5, 2010). The court rejected the appellant‘s contention that Commerce exceeded the scope of the remand order by recalculating the U.S. price, concluding that Commerce properly used other sources of U.S. price data when it determined that it could not corroborate its initial AFA rate on remand. The court found that the separate rate recalculation was supported by substantial evidence and was reasonable in view of Commerce‘s well-established methodologies. It rejected the contention that BWA‘s data failed to reflect commercial reality as required by Gallant Ocean (Thail.) Co. v. United States, 602 F.3d 1319, 1323 (Fed. Cir. 2010), observing that because BWA had a large market share, its data substantially reflected the HEDP market. The court likewise considered and rejected the appellant‘s argument that Commerce “erroneously chose BWA‘s data solely to obtain a positive separate rate and, instead, should have used data from another uncooperative respondent.” Changzhou, 2010 Ct. Int‘l. Trade LEXIS 96, at *11.
After the Court of International Trade denied Jiangsu Jianghai and Wujin Fine Chemical‘s motions for reconsideration, Changzhou Wujin Fine Chem. Factory Co. v. United States, No. 09-CV-0216, 2010 Ct. Intl. Trade LEXIS 106, at *4 (Sept. 13, 2010), this appeal followed.5 We have jurisdiction pursuant to
DISCUSSION
This appeal presents the following issues: (1) whether the Court of International Trade has jurisdiction to review Commerce‘s post-remand modification of U.S. price; and (2) whether Commerce acted arbitrarily when recalculating the separate rate assigned to appellant Jiangsu Jianghai, a cooperative respondent.
This court reviews decisions of the Court of International Trade concerning Commerce‘s antidumping determinations by applying the same standard of review used by the trade court. Gallant Ocean, 602 F.3d at 1323 (citing Tung Mung Dev. Co. v. United States, 354 F.3d 1371, 1378 (Fed. Cir. 2004)). In essence, Commerce‘s determination will be sustained unless it is “unsupported by substantial evidence on the record, or otherwise not in accordance with law.”
I
We must first decide whether Commerce‘s recalculation of U.S. price was within the scope of the Court of International Trade‘s remand order.
We generally disfavor limited remands that restrict Commerce‘s ability to collect and fully analyze data on a contested issue. See Am. Silicon Techs. v. United States, 334 F.3d 1033, 1038-39 (Fed. Cir. 2003) (“By sharply limiting Commerce‘s
The appellant argues that the voluntary remand order was limited in scope, only permitting Commerce to reconsider the normal value and the impact the surrogate values and financial ratios had on the AFA rate. According to the appellant, the remand order placed only two issues before Commerce: “whether Commerce corroborated the adverse facts available rate upon which it relied in calculating the separate rate,” and whether Commerce used the proper financial ratios and surrogate values. Remand Order 1-2. The appellant argues that “[t]he first of these issues is clearly inapplicable to the U.S. price as it merely goes to the test of the selected final rate,” Appellant‘s Br. 17, while the second issue relates to calculation of the normal value, not U.S. price. Because the remand order required only corroboration of the normal value and no party challenged the U.S. price, the appellant concludes, Commerce had no authority to recalculate U.S. price.
We agree with Commerce that recalculating the U.S. price was within the scope of the voluntary Remand Order. Nothing in the remand order limited Commerce to recalculating the normal value when “examining ... whether [it] corroborated the adverse facts available rate upon which it relied in calculating the separate rate.” See Remand Order 1-2. Commerce specifically requested the partial voluntary remand “to examine the issues related to the adverse facts available rate, to make any necessary recalculations based on its examination, and to obtain comments from the parties.” Def‘s. Resp. to Mot. for J. on the Admin. R. at 2, 23, Changzhou Wujin Fine Chem. Factory Co. v. United States, No. 09-CV-0216 (Ct. Int‘l Trade Jan. 26, 2010), ECF No. 36.
Commerce‘s reexamination of the AFA rate used in calculating the appellant‘s separate rate necessarily involved reconsideration of the underlying variables, i.e., normal value and U.S. price. See
II
The second question is whether Commerce acted arbitrarily in recalculating the appellant‘s separate rate, when Commerce constructed a hypothetical AFA rate based on U.S. price data obtained from a non-cooperating respondent, averaged that hypothetical AFA rate with the de minimis rate for Wujin Water, and then assigned the resulting separate rate to the appellant. The hypothetical AFA rate Commerce generated on remand was an “AFA rate” in name only: its sole purpose was to serve as a value in the
The applicable statute contemplates that the separate rate will generally be calculated by taking a weighted average of dumping margins assigned to individually investigated entities, excluding those margins that are zero, de minimis, or determined entirely on the basis of AFA.
The appellant has not argued that the simple average methodology suggested by the statute is unreasonable in all circumstances, nor even that it is necessarily unreasonable when applied to cooperating parties.7 Rather, the appellant argued to Commerce and before the Court of International Trade that Commerce‘s stated reasons for its approach were arbitrary, because deterrence is not a sufficient justification when calculating a rate that solely affects cooperating respondents.8 The
[t]he most appropriate, if not the only appropriate method [of calculating the appellant‘s separate rate], is to use the Q & V [data] of the appellant, and another cooperative party which actively participated in the investigation and provided multiple responses to Department questionnaires.... The Department rejected the use of this data alleging that it would result in an AFA rate which would be zero and that a rate of zero would not act as a deterrent. Appellant notes that the new “AFA” rate would not be used for any purpose other than assigning a rate to Appellant, a cooperative [separate rate applicant] respondent.... [D]eterrence is not the only factor involved in calculating an AFA rate, and deterrence is never a factor in calculating a non-AFA rate.
Appellant‘s Br. 34-35. Commerce responded that “a zero percent adverse facts available rate would not be sufficiently adverse to effectuate the purpose of the adverse facts available rule,” Appellee‘s Br. 32, and therefore
when Commerce determines an [AFA] rate, it selects a rate that is sufficiently adverse and selects the highest rate in the record of the proceeding to ensure the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully. Selecting Kewei‘s data, which would have yielded a zero percent facts available rate, would not satisfy this standard.
Id. at 36 (citation omitted). In its reply brief, the appellant continued to argue that “[t]he United States[‘] entire basis for the selection of a new U.S. price in this matter is that of ‘deterrence.’ This results oriented method is not a sufficient basis for the selection of an AFA rate,” Reply Br. 9, to be used solely “as a substitute in the calculation” of a separate rate for cooperating respondents. Id. at 9 n. 1.
The question is whether Commerce‘s method was arbitrary and capricious. The dissent urges that the arbitrary and capricious standard is inapplicable, and that we should instead apply a substantial evidence standard. What the dissent fails to appreciate, however, is that a reviewing court must apply both standards, and that “an agency‘s finding may be supported by substantial evidence,” yet “nonetheless reflect arbitrary and capricious action.” Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 284 (1974). The dissent correctly points out that the substantial evidence standard applies to review of factual determinations. But here we are evaluating the agency‘s reasoning, which is reviewed under the arbitrary and capricious (or contrary to law) standard. See Motor Vehicle Mfrs. Ass‘n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 48-49 (1983). Therefore, we first ask whether Commerce articulated an adequate reason for calculating the appellant‘s separate rate in the manner chosen on remand.
“The grounds upon which an administrative order must be judged are those upon which the record discloses that its action was based.” SEC v. Chenery Corp., 318 U.S. 80, 87 (1943). Tellingly, Commerce has not con-
[a]n AFA rate of zero [or de minimis] would not be sufficiently adverse as to effectuate the purpose of the facts available rule to induce respondents to provide the Department with complete and accurate information in a timely manner and would not ensure that uncooperative parties do not obtain a more favorable result by failing to cooperate than if they had cooperated fully.
Final Remand Redetermination 16 (emphasis added). In other words, Commerce chose to use BWA‘s data in the course of recalculating the appellant‘s separate rate because those data gave the most adverse margin possible, and an adverse margin is necessary to deter non-cooperating respondents. See also De Cecco, 216 F.3d at 1032.
Deterrence is not relevant here, where the “AFA rate” only impacts cooperating respondents. We find no support in our caselaw or the statute‘s plain text for the proposition that deterrence, rather than fairness or accuracy, is the “overriding purpose” of the antidumping statute when calculating a rate for a cooperating party. See, e.g., Parkdale Int‘l v. United States, 475 F.3d 1375, 1380 (Fed. Cir. 2007) (“[A]n overriding purpose of Commerce‘s administration of antidumping laws is to calculate dumping margins as accurately as possible ...“) (citing Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990)). Quite the contrary: applying an adverse rate to cooperating respondents undercuts the cooperation-promoting goal of the AFA statute. Commerce misses the point when it argues that the appellant cannot complain because it does not bear an AFA rate directly, but only a separate rate derived from the AFA rate, which is only half as adverse. Although the hypothetical AFA rate was not directly applied to a cooperating respondent, cooperating respondents were the only entities impacted by the recalculated rate.
Contrary to Commerce‘s argument, the AFA statute does not compel this result. Commerce maintains that despite its broad discretion in making antidumping determinations, its hands are tied by
Furthermore, AFA rates are disfavored by the statute:
Finally, while administrative convenience might support averaging previously-determined, previously-corroborated rates assigned to mandatory respondents, including AFA respondents if there are no alternatives, see
In summary, the issue before the court is not whether Commerce properly considers the policy goals of the antidumping statute in conducting its investigations (it does), nor whether Commerce may draw adverse inferences when assigning AFA rates to non-cooperating respondents (it may). Rather, we address the narrower question of whether Commerce acted reasonably when-by its own account-it cherry-picked the single data point that would have the most adverse effect possible on cooperating voluntary respondents, in a situation where there was no need or justification for deterrence. “[R]eview of an administrative decision must be made on the grounds relied on by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis.” In re Lee, 277 F.3d 1338, 1345-46 (Fed. Cir. 2002) (quoting Securities and Exchange Commission v. Chenery, 332 U.S. 194, 196 (1947)). In this case, we think it clear that Commerce acted in an arbitrary and capricious manner.
For the foregoing reasons, we affirm the decision of the Court of International Trade in part, reverse in part, and remand to Commerce to once again reconsider its approach to calculating the appellant‘s separate rate. In doing so, Commerce must act non-arbitrarily and must explain why its approach is a “reasonable method” of calculating a separate rate, in light of the alternatives available, and with recognition of the fact that the remand calculation will affect only cooperating respondents.
AFFIRMED-IN-PART, REVERSED-IN-PART, AND REMANDED.
COSTS
Each party shall bear its own costs.
The majority‘s conclusion that the Department of Commerce (“Commerce“) acted arbitrarily when it assigned appellant Jiangsu Jianghai Chemical Group, Ltd. a company-specific Adverse Facts Available (“AFA“) rate is based on three fundamental errors.
First, the majority goes to great length to address an AFA issue that was neither appealed nor otherwise properly before this court. Appellant had conceded that specific issue in the underlying proceedings before Commerce and the Court of International Trade.
Second, the majority manifests a fundamental misunderstanding of the AFA statute and how AFA applies in the context of antidumping duty investigations. The majority writes to cure what it perceives to be an injustice created by Commerce applying AFA to a voluntary, cooperating respondent. But the AFA statute operates both to encourage cooperation in antidumping investigations, and to prevent absurd or unjust results when parties, cooperating or not, have submitted incomplete or unusable data, such as awarding a de minimis or zero dumping rate to an undeserving respondent.
Third, the majority applies the wrong standard of review. The majority applies an arbitrary and capricious standard to Commerce‘s fact finding determinations. Our case law and that of the Court of International Trade makes clear that a substantial evidence standard of review applies with respect to factually based determinations. Consistent with the statute, this court gives deference to the expertise of the administrating authority, particularly with respect to the application of AFA and its choice of methodology.
In sum, the majority has created its own issue, which it hoists with non-existing terminology,1 it seeks to correct a wrong and sets the foundation for absurd results in the future, and it conducts its analysis under the wrong standard of review. I dissent.
I. The Issue on Appeal
The majority asserts that only two issues were on appeal and that the second issue was framed as follows:
“[W]hether Commerce acted arbitrarily in recalculating the appellant‘s separate rate, when Commerce constructed a hypothetical AFA rate based on U.S. price data obtained from a non-cooperating respondent, averaged that hypothetical AFA rate with the de minimis rate for Wujin Water, and then assigned the resulting separate rate to the appellant.”
Majority op. at 15. This statement of the AFA issue on appeal is symptomatic of the majority opinion: It represents the point of mistaken embarkation from which the opinion sails into areas well beyond the scope of this appeal. It introduces a new term to antidumping law, “hypothetical AFA rate,” with the apparent purpose of injecting anomaly into what is essentially a typical AFA case.
The appellant, in fact, raises four issues on this appeal. In its brief at the Statement of Issues section, appellant details only four issues: two issues pertain to whether Commerce exceeded the scope of the remand order, and a third issue pertains to Commerce‘s decision to recalculate U.S. price on remand. The fourth issue appellant raises is the only issue that pertains to the AFA rate assigned to appellant. A simple review of this issue reveals that it is markedly different from the issue
4. Whether the U.S. Court of International Trade committed error when it ratified the Department‘s arbitrary selection of certain data to form the basis for a recalculated U.S. price in the remand determination.
Appellant‘s Br. at 3 (emphasis added).
A comparison of the majority‘s and the appellant‘s issues reveals that the majority devotes its attention to whether Commerce acted arbitrarily in the methodology used to arrive at, or calculate, the AFA rate. Appellant, however, does not challenge the methodology, but rather the data selected by Commerce to recalculate the new U.S. price. In fact, appellant conceded before Commerce and the Court of International Trade that it did not challenge the AFA methodology.
The substantive difference between data used in antidumping calculations and the methodology Commerce adopts to perform antidumping calculations is profound.
The majority opinion demonstrates a failure to distinguish between data and methodology in the context of antidumping duty investigations and instead addresses methodology when the appeal is about the data.
Indeed, litigants in dumping cases understand well the distinction between data and methodology as the two areas are often the points of greatest contention. This case is a good example of how litigants will base a strategy on data and not methodology, or vice versa. As the appellant notes in its brief, it stood to receive a zero dumping margin had Commerce made the adjustments it sought to normal value (and which it sought on remand) while retaining the same methodology used in the investigation to arrive at the appellant‘s separate rate. What appellant failed to forecast was that Commerce on remand would recalculate U.S. price and use U.S. sales data taken from BWA‘s questionnaire responses. As a result, on remand its margins were only cut in half, as opposed to driven to zero. This is why on this appeal the appellant challenges (1) Commerce‘s authority to recalculate a new U.S. price (that it exceeded the scope of the remand order), and (2) that Commerce acted arbitrarily in its use of the BWA data (because it should have used data from the petition or its own data). If it wins on either issue, it stands to obtain a zero margin.2
II. The Standard of Review
In addition to addressing the wrong issue as a result of failing to distinguish between data and methodology, the majority goes on to apply the wrong standard of review. As noted below, the correct standard of review for Commerce‘s factual de-
III. The Purpose of AFA
The errors advanced by majority opinion portend grave consequences in the application of the U.S. antidumping statutes. In particular, the majority opinion creates a new AFA standard for cooperating respondents whose data is incomplete or inaccurate. This is because the majority sees only one side of the AFA deterrence coin, that AFA rates are intended to compel participation in dumping cases. It fails to see the flip side of the coin; AFA rates also ensure that a cooperating respondent whose data for whatever reason is insufficient is not undeservedly awarded a de minimis or zero dumping rate. See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381 (Fed. Cir. 2003) (“Commerce may impose an adverse inference after determining that a respondent has not been fully cooperative or has failed to act to the best of its ability in gathering information.” (emphasis added)). At bottom, the majority addresses an issue not in controversy to inject its view of fairness into dumping proceedings by replacing the judgment of the administrating agency with its own.
IV. The AFA Data and Methodology
I agree with Commerce that recalculating U.S. price was within the scope of the voluntary remand order. Nothing in the remand order limited Commerce only to recalculating the normal value when “examining ... whether [it] corroborated the adverse facts available rate upon which it relied in calculating the separate rate.” See Changzhou Wujin Fine Chem. Factory Co. v. United States, No. 09-00216, 2010 Ct. Intl. Trade LEXIS 108, at *1-2 (Ct. Int‘l Trade Feb. 8, 2010). After requesting a remand in the terms adopted verbatim by the Court of International Trade, Commerce further requested that “if the Court grants [Commerce‘s] request for a partial remand, the Court allow Commerce ... to examine the issues related to the adverse
Once Commerce determined that it could not corroborate the AFA rate, it had to calculate a new AFA rate for purposes of calculating appellant‘s separate rate. Because AFA rates are based on the difference between the normal value and U.S. price, Commerce‘s establishment of the AFA rate necessarily involved considering the continued viability of both normal value and U.S. price. See
Nor did Commerce err in its recalculation of appellant‘s separate rate. Generally, the separate rate is the weighted average of dumping margins established for entities individually investigated, excluding zero and de minimis margins, and margins determined entirely on the basis of AFA.
Throughout the investigation and on remand, Commerce has consistently applied a methodology for calculating separate AFA rates whereby it averaged the dumping margins assigned to the entities that were individually investigated. Appellant has not challenged Commerce‘s decision to use this methodology before the Court of International Trade, nor has it done so on this appeal. U.S. Appellee Br. at 33; Compass Appellee Br. at 9 n. 2. The records shows that appellant has specifically endorsed this methodology, Joint App‘x at 1571; 1582-83, and directs its challenge solely to Commerce‘s decision to use BWA‘s U.S. price in the AFA calculation.5 Stated differently, appellant challenges the data used, not the methodology employed.
Appellant offers a host of reasons why it believes that Commerce‘s decision to use the U.S. price of BWA, a single uncooperative respondent, in its AFA rate calculation was contrary to law. It argues that BWA‘s U.S. price is an “extreme outlier” and does not reflect a “commercial reality.”6 Appellant relies on Gallant Ocean (Thail.) Co. v. United States, 602 F.3d 1319 (Fed. Cir. 2010), where this court held that an AFA rate more than five times higher than the highest rate applied to a cooperating respondent was not supported by substantial evidence. 602 F.3d at 1324.
Appellant‘s reliance on Gallant Ocean is misplaced. First, although the AFA rate determined by Commerce in this case is arguably a multiple of the highest calculated rate, Appellant Br. at 37, the AFA rate was not applied to appellant directly, but rather was used to calculate a separate rate. It would be unreasonable to require such a rate to reflect a commercial reality of appellant. Compare Gallant Ocean, 602 F.3d at 1323-24 (reversing a 57.64% AFA rate applied to Gallant because it had no grounding in Gallant‘s commercial reality), with PAM, S.p.A. v. United States, 582 F.3d 1336, 1336, 1340 (Fed. Cir. 2009) (affirming a 45.49% AFA rate applied to PAM although only 0.5% of its U.S. sales were at that margin), and Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1339 (Fed. Cir. 2002) (affirming a 30.95% AFA rate applied to Ta Chen although only 0.04% of its sales during the period of review were at that margin).
Second, this court in Gallant Ocean held that “Commerce failed to corroborate the adjusted petition rate with ‘independent sources that are reasonably at [its] disposal.‘” 602 F.3d at 1324 (alteration in original) (citing
Finally, whereas Commerce “possess[ed] ... better information” and “had abundant resources from which to calculate a reasonable AFA rate” in Gallant Ocean, 602 F.3d at 1323-24, any other combination of U.S. price data in this case, other than BWA‘s alone, would have resulted in a zero or de minimis dumping margin. Commerce wields the AFA rate to deter noncompliance with its investigations. De Cecco, 216 F.3d at 1032. This objective would be undermined if we compelled it to use de minimis AFA rates. As Commerce observed,
[a]n AFA rate of zero [or de minimis] would not be sufficiently adverse as to effectuate the purpose of the facts available rule to induce respondents to provide the Department with complete and accurate information in a timely manner and would not ensure that uncooperative
parties do not obtain a more favorable result by failing to cooperate than if they had had cooperated fully.
Changzhou Wujin Fine Chemical Factory Co. v. United States, No. 09-00216, ECF No. 44, at 16 (Apr. 30, 2010) (Final Results of Redetermination Pursuant to Court Order).
The circumstances of this case are distinct in that Commerce redetermined the AFA rate on remand solely for the purposes of determining appellant‘s separate rate; the other non-cooperative respondents did not challenge, and thus were assigned, the AFA petition rate of 72.42%. Yet it remained within Commerce‘s discretion to choose which sources and facts to rely on to support an adverse inference. See De Cecco, 216 F.3d at 1032. Appellant‘s failure to challenge as unreasonable Commerce‘s separate rate calculation methodology exposed it to the consequences flowing from Commerce‘s discretion to select an AFA rate sufficiently adverse to effectuate the purposes of the statute. While Commerce‘s discretion was not boundless, id., assigning an AFA rate of zero or de minimis would be contrary to the statutory objectives of the AFA rate. Indeed, if Commerce had used any of the alternative data sources appellant advances in this appeal, a de minimis AFA rate would result.
I therefore would hold that Commerce‘s reliance on BWA‘s data for U.S. price, and that the methodology it selected to calculate the separate rate for appellant was supported by substantial evidence and otherwise not contrary to law.
Notes
When the administering authority or the Commission relies on secondary information rather than on information obtained in the course of an investigation or review, the administering authority or the Commission, as the case may be, shall, to the extent practicable, corroborate that information from independent sources that are reasonably at their disposal.
We “must [] consider whether Commerce‘s application of the facts available was reasonable and supported by substantial evidence.” Ningbo Dafa Chem. Fiber Co. v. United States, 580 F.3d 1247, 1258 (Fed. Cir. 2009). Here, the appellant‘s challenge to the hypothetical AFA rate has two aspects: first, that Commerce‘s deterrence-oriented calculation was not a reasonable method of obtaining a separate rate, and was therefore arbitrary; and second, that substantial evidence does not support the use of the AFA rate in any event. Both aspects of the appellant‘s challenge to the use of the AFA rate in this case are consistent with its general concession that simple averaging is not impermissible, so long as the methodology does not produce an unlawful result. Because the appellant is correct that Commerce‘s use of the AFA rate in this case is not reasonable, we need not decide the merits of the other aspect of its challenge.