This action returns to the U.S. Court of International Trade from Commerce following a remand redetermination ordered by the U.S. Court of Appeals for the Federal Circuit directing Commerce to revise its determination of the "separate rate" and apply the "expected method" under 19 U.S.C. § 1673d(c)(5)(B), or to justify any departure from the "expected method." Changzhou Hawd Flooring Co. v. United States,
Separate rate respondents Changzhou Hawd Flooring Co., Ltd., Dalian Huilong Wooden Products Co., Ltd., Dunhua City Jisen Wood Industry Co., Ltd., Dunhua City Dexin Wood Industry Co., Ltd., Kunshan Yingyi-Nature Wood Industry Co., Ltd, and Karly Wood Product Limited (together, "Changzhou Hawd"); Fine Furniture (Shanghai) Limited ("Fine Furniture"); Armstrong Wood Products (Kunshan) Co., Ltd. ("Armstrong") challenge the Fifth Remand Results. See Pl.-lntervenor Armstrong's Comments Regarding
For the reasons set forth below, the court sustains Commerce's decision (1) denying Lumber Liquidators' request to terminate the Order ab initio, and (2) denying exclusion from the Order for the separate rate respondents that did not request voluntary examination. For the three separate rate respondents that requested voluntary examination during the investigation (Fine Furniture, Armstrong, and Dunhua City Jisen Wood Industry Co., Ltd., collectively, "Voluntary Applicants"), the court determines that Commerce arbitrarily applied its exclusion regulation, 19C.F.R. § 351.204(e)(1), and enters judgment ordering Commerce to exclude them from the Order.
I. Standard of Review
The court sustains Commerce's "determinations, findings, or conclusions" unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings, or conclusions for substantial evidence, the court assesses whether the agency action is reasonable given the record as a whole. Nippon Steel Corp. v. United States,
Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc.,
II. Discussion
The portion of this action now before the court involves Commerce's exclusion regulation,
During notice and comment for § 351.204, Commerce explained that the regulation "provides that any exporter or producer that is individually examined and that receives an individual weighted-average dumping margin ... of zero or de minimis will be excluded from an order." Antidumping Duties; Countervailing Duties: Proposed Rulemaking,
As for former §§ 353.14 and 355.14, ..., these provisions are no longer necessary in light of the amendments to the statute made by the URAA, .... These provisions, notwithstanding their titles, functioned as a mechanism for considering requests by voluntary respondents to be investigated. As stated by the Department when it adopted § 351.14:
If the Department includes a producer or reseller in its investigation and determines that the producer or reseller had no dumping margin during the period of investigation, the Department would automatically exclude that producer or reseller from the antidumping duty order, even if the producer or reseller did not request exclusion under the procedures described in [§ 353.14]. The purpose of this section merely is to provide an opportunity for producers and resellers that the Department might not otherwise include in its investigation to request that the Department specifically include and investigate them.
Final Rule (Antidumping Duties ),54 Fed. Reg. 12,742 , 12,748 (1989)....
Given their original purpose, §§ 353.14 and 355.14 have become superfluous in light of section 782(a) of the Act and § 351.204(d) (which establish new procedures for dealing with voluntary respondents) and § 351.204(e)(3) (which deals with exclusion requests in CVD investigations conducted on an aggregate basis). Under these provisions, decisions on exclusions will be based on a firm's actual behavior, as opposed to assertions regarding its possible future behavior.
Plaintiffs and Defendant argue that the action should be resolved under the first prong of Chevron, contending that the statute mandates one and only one outcome on the issue before the court: whether separate rate respondents-in a resource-constrained, non-market economy investigation-must be excluded from the antidumping duty order if they are assigned a zero percent all-others rate. See Armstrong Cmts. at 4 (arguing that the "governing statute is crystal clear" and mandates exclusion of all producers or exporters assigned a de minimis rate); Fine Furniture Cmts. at 5 ("Statute Requires Exclusion Where Commerce Assigns a Zero/De Minimis Rate"); Def.'s Reply at 11-13 ("The Statute Unambiguously Precludes The Relief That The Separate Rate Plaintiffs Seek").
The court does not believe Congress had this precise question in mind when it drafted the applicable provisions:
19 U.S.C. § 1673d(a)(4) requires Commerce to exclude any weighted average dumping margin that is de minimis:
(4) De minimis dumping margin
[For a final determination], [Commerce] shall disregard any weighted average dumping margin that is de minimis ....2
The term "weighted average dumping margin" is the percentage determined by dividing the aggregate dumping margins determined for a specific exporter or producer by the aggregate export prices and constructed export prices of such exporter or producer.
19 U.S.C. § 1673d(b)(5) describes the term "all-others rate":
(5) Method for determining estimated all-others rate
(A) GENERAL RULE
... the estimated all-others rate shall be 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 under section 1677e of this title.
(B) EXCEPTION
If the estimated weighted average dumping margins established for all exporters and producers individually investigated are zero or de minimis margins, or are determined entirely under section 1677e of this title, the administering authority may use any reasonable method to establish the estimated all-others rate for exporters and producers not individually investigated, including averaging the estimated weighted average dumping margins determined for the exporters and producers individually investigated.
19 U.S.C. § 1673d(c)(1)(B)(i) requires Commerce to
(I) determine the estimated weighted average dumping margin for each exporter and producer individually investigated, and
(II) determine, in accordance with paragraph (5), the estimated all-others rate for all exporters and producers not individually investigated. ...
19 U.S.C. § 1677f-1(c) elaborates upon Section 1673d(c)(1)(B)(l) :
(1) GENERAL RULE In determining weighted average dumping margins under section... 1673d(c) ... of this title, [Commerce] shall determine the individual weighted average dumping margin for each known exporter and producer of the subject merchandise.
(2) EXCEPTION If it is not practicable to make individual weighted average dumping margin determinations under paragraph (1) because of the large number of exporters or producers involved in the investigation or review, [Commerce] may determine the weighted average dumping margins for a reasonable number of exporters or producers by limiting its examination to-
...
(B) exporters and producers accounting for the largest volume of the subject merchandise from the exporting country that can be reasonably examined.
Section 1677f-1(c)(1) obligates Commerce to determine an individual weighted average dumping margin for all respondents. This is rare in practice. Here, Commerce did not individually investigate the hundred-some-odd producer/exporters of multilayered wood flooring from the PRC. Resource constrained, Commerce selected the two largest volume producers/exporters as mandatory respondents. Both of them, after court-ordered remands, were assigned de minimis dumping margins (zero percent) and were excluded from the Order. See
Not so long-ago Commerce's calculation of de minimis margins for all individually investigated respondents would have led to termination of an order ab initio because there was no basis for an affirmative less than fair value determination (no evidence of dumping). Things changed with Commerce's adoption of its PRC-wide entity policy, see Import Administration Policy Bulletin 05.1: Separate-Rates Practice and Application of Combination Rates in Antidumping Investigations involving Non-Market Economy Countries (Apr. 5, 2005), which effectively enables Commerce to make an affirmative less than fair value determination even though all individually investigated mandatory respondents receive de minimis margins, which is what happened in this action. See Final Determination,
Commerce ultimately did exclude the mandatory respondents from the Order. To derive the separate rate, Commerce averaged the zero rates assigned to the mandatory respondents under the "expected method". See Fifth Remand Results at 8. The question is whether that zero percent "all-others rate", 19 U.S.C. §§ 1673d(c)(1)(B)(i)(ll), 1673d(c)(5), constitutes "any" de minimis weighted average dumping margin that Commerce must "disregard" pursuant to 19 U.S.C. § 1673d(a)(4).
The term "any" is broad, and the "all-others rate" is just a proxy for the individual weighted average dumping margins Commerce, in theory, should calculate for all respondents pursuant to § 1677f-1(c)(1) (which, as noted above, is rare in practice). Article 5.8 of the Anti-Dumping Agreement also speaks in broad terms, requiring "immediate termination in cases where the authorities determine that the margin of dumping is de minimis...." Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, art. 5.8. It is entirely possible, therefore, that Congress intended Commerce to disregard a zero percent all-others rate (and
That means there is some free play in the statute. And that, in turn, implicates the second prong of Chevron, under which the court must defer to Commerce's permissible construction of the statute. See Chevron,
The separate rate respondents argue that Commerce waited too long over the course of the litigation to apply the exclusion regulation. See Armstrong Cmts. at 2-3; Fine Furniture Cmts. at 14-19; see also id. at 15-17 (highlighting that plaintiffs expressly requested exclusion from the order as part of their initial Complaint, subsequent motions for summary judgment on the agency record, in their comments and briefing on the prior remand redeterminations, and in oral argument before the Federal Circuit). Defendant acknowledges that plaintiffs raised the issue of exclusion early on, but avers that Commerce was not squarely presented with the issue of whether separate rate plaintiffs should be excluded from the order until the Fifth Remand Results. See Def.'s Reply at 9-10 ("We acknowledge that certain separate rate plaintiffs have long taken the position that they should be excluded from the order. But it was not necessary for Commerce to evaluate the merits of plaintiffs' argument until the Federal Circuit reversed this Court's judgment and Commerce assigned a zero margin to the separate rate plaintiffs." (internal citation omitted) ).
The court understands that it would have been preferable if Commerce had raised the exclusion regulation before the Federal Circuit in Changzhou Hawd VI, and explained that there would be no substantive effect to assigning the separate rate respondents a zero percent margin. That omission, however inefficient, does not invalidate the regulation or mute its operation. It was duly promulgated in 1997 and carries the force of law. What does give the court pause, however, is Commerce's application of the exclusion regulation to the Voluntary Applicants. Given the history of the exclusion regulation in which concerns about limiting exclusion to selected/mandatory respondents were mitigated through the availability of voluntary examination,
Defendant notes that the Voluntary Applicants did not challenge Commerce's respondent selection. See Def.'s Reply at 12, 22 (explaining that Commerce's respondent selection decisions have not been challenged). Although they chose not to appeal Commerce's refusal to conduct any voluntary examinations, the Voluntary Applicants may nevertheless challenge Commerce's separate and distinct decision denying them exclusion from the Order. That determination (like many Commerce determinations), just happens to comprise numerous other decisions Commerce made through the course of the proceeding: mandatory respondent selection, treatment of voluntary examination requests, the calculation of each of the mandatory respondents' margins, and the calculation of the separate rate, among others. Commerce's determination that resource constraints precluded voluntary examinations may itself have been reasonable. Having made that decision, Commerce's subsequent decision to refuse to exclude Voluntary Applicants assigned a zero percent margin is not.
Commerce's exclusion regulation requires individual examination for exclusion because, as a policy matter, it wants to confirm that a specific party is not in fact dumping. That policy carries a corresponding inference or assumption that a party is trading unfairly unless it can demonstrate with its own direct evidence that it is not. In explaining the enactment history of the exclusion regulation, Commerce acknowledged that "the revised statutory language and regulations allowed for companies not selected for individual examination to request participation as voluntary respondents." Fifth Remand Results at 13.
The court believes Commerce's application of its exclusion regulation to the Voluntary Applicants it assigned "representative" zero percent margins has two insurmountable problems. The first is Commerce's refusal to conduct any voluntary examinations, preventing the Voluntary Applicants from demonstrating directly their own evidence of fair trading. The second is Commerce's continuing assumption or inference that Voluntary Applicants denied individual examination and ultimately assigned a "representative" zero percent margin were nevertheless unfairly trading, precluding exclusion. The court questions how a reasonable mind could maintain such an assumption or inference against the Voluntary Applicants. With that said, the court does believe there is a material difference between those separate rate respondents that requested voluntary examination, and those that did not. In the court's view, those that did not cannot overcome the regulation and the underlying inference/assumption that they were unfairly trading despite being assigned the same "representative" zero percent margin.
As for remedy, the court typically remands for further consideration when it identifies unreasonableness or arbitrariness in agency decision-making. See Harry T. Edwards & Linda A. Elliott, Federal Standards of Review 276-77 (3d ed. 2018) ("When a court finds that an agency action
III. Conclusion
Based on the foregoing, the court sustains Commerce's decision (1) denying Lumber Liquidators' request to terminate the Order ab initio, and (2) denying exclusion from the Order for the separate rate respondents that did not request voluntary examination. For the Voluntary Applicants, the court determines that Commerce arbitrarily applied its exclusion regulation, 19C.F.R. § 351.204(e)(1), and will enter judgment ordering Commerce to exclude them from the Order. Judgment will enter accordingly.
Notes
The court finds unpersuasive Defendant and Changzhou Hawd's arguments about Commerce's prior practice for dealing with exclusion from an order (albeit disagreeing about what that practice is). Commerce reaches back to a 28-year old determination in which Commerce did not exclude respondents assigned an "all-others" rate of zero. See Fifth Remand Results at 12 (citing Certain Small Business Telephone Systems and Subassemblies Thereof from Taiwan,
The Statement of Administrative Action notes that "{e}xporters or producers with de minimis margins will be excluded from any affirmative determination." Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103-316, at 844 (1994), reprinted in 1994 U.S.C.C.A.N. 4040. Additionally, Article 5.8 of the Anti-Dumping Agreement requires that "{t}here shall be immediate termination in cases where the authorities determine that the margin of dumping is de minimis, or that the volume of dumped imports, actual or potential, or the injury is negligible." Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, art. 5.8.
This action was previously consolidated with an action challenging the Final Determination brought by the mandatory respondents. See Baroque Timber Indus. (Zhongshan) Co. v. United States, Court No. 12-00007. Commerce's results of the first remand in this matter assigned de minimis rates to the mandatory respondents, and assigned a rate of 6.41 percent to the separate rate respondents based on a simple average of the three zero-percent mandatory respondent margins and a PRC-wide entity margin of 25.62 percent. See First Remand Results at 45.
After many court decisions and remands, trade cases have a way of taking on the feel of Jarndyce and Jarndyce: "Jarndyce and Jarndyce drones on. This scarecrow of a suit has, over the course of time, become so complicated, that no man alive knows what it means." Charles Dickens, Bleak House, Chapter 1 (1852-53).