The STANLEY WORKS (LANGFANG) FASTENING SYSTEMS CO., LTD. and The Stanley Works/Stanley Fastening Systems, LP, Plaintiffs, v. UNITED STATES, Defendant, and Mid Continent Nail Corporation, Defendant-Intervenor. Mid Continent Nail Corporation, Plaintiff, v. United States, Defendant, and The Stanley Works (Langfang) Fastening Systems Co., Ltd. and The Stanley Works/Stanley Fastening Systems, LP, Defendant-Intervenors.
Court No. 11-00102
United States Court of International Trade
Sept. 3, 2013
Slip Op. 13-118
RIDGWAY, Judge
1311
For the foregoing reasons, it is ORDERED AND ADJUDGED as follows:
- Plaintiff‘s Motion [DE 5] is hereby GRANTED;
- Defendants shall, on or before August 20, 2013, provide the sum of $205,000.00 directly to Plaintiff as “trust funds” and collateral security to be utilized in accordance with the Indemnity Agreement and Bonds.
The STANLEY WORKS (LANGFANG) FASTENING SYSTEMS CO., LTD. and The Stanley Works/Stanley Fastening Systems, LP, Plaintiffs, v. UNITED STATES, Defendant, and Mid Continent Nail Corporation, Defendant-Intervenor.
Mid Continent Nail Corporation, Plaintiff, v. United States, Defendant, and The Stanley Works (Langfang) Fastening Systems Co., Ltd. and The Stanley Works/Stanley Fastening Systems, LP, Defendant-Intervenors.
Slip Op. 13-118. Court No. 11-00102. United States Court of International Trade. Sept. 3, 2013.
Carrie A. Dunsmore, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendant. With her on the brief were Stuart F. Delery, Assistant Attorney General, Civil Division, and Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director, Commercial Litigation Branch. Of counsel on the brief was Nathaniel J. Halvorson, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, D.C.
Adam H. Gordon, Wiley Rein LLP, of Washington, D.C., argued for Mid Continent Nail Corporation. With him on the brief were Robert E. DeFrancesco, III and Lori E. Scheetz.
OPINIÓN
RIDGWAY, Judge:
In this consolidated action, foreign exporters of steel nails The Stanley Works (Langfang) Fastening Systems Co., Ltd. and The Stanley Works/Stanley Fastening Systems, LP (collectively “Stanley“) and domestic producer of steel nails Mid Continent Nail Corporation (“Mid Continent“) contest the final results, as amended, of the U.S. Department of Commerce‘s first administrative review1 of the antidumping duty order covering steel nails from the People‘s Republic of China (“PRC“). See Certain Steel Nails from the People‘s Re-
Pending before the court are three separate motions: Mid Continent‘s Motion for Judgment on the Agency Record, Stanley‘s Motion for Judgment on the Agency Record, and Defendant United States’ Motion for Partial Voluntary Remand.
Mid Continent contests four aspects of Commerce‘s Final Results specifically, Commerce‘s decision not to use the intermediate input methodology when calculating Stanley‘s normal value, Commerce‘s decision not to apply adverse facts available to missing factors of production data, Commerce‘s selection of sources for surrogate financial ratios, and Commerce‘s selection of data for surrogate electricity values. See generally Amended Memorandum in Support of Mid Continent Nail Corporation‘s Rule 56.2 Amended Motion for Judgment on the Agency Record (“Mid Continent Brief“); Reply Brief of Mid Continent Nail Corporation (“Mid Continent Reply Brief“).3 Stanley and the Government oppose Mid Continent‘s motion. See generally Memorandum of Plaintiffs The Stanley Works (Langfang) Fastening Systems Co., Ltd. and The Stanley Works/Stanley Fastening Systems, LP in Opposition to Mid Continent‘s Rule 56.2 Motion for Judgment Upon the Administrative Record (“Stanley Response Brief“); Defendant‘s Memorandum in Opposition to Plaintiffs’ Rule 56.2 Motions for Judgment Upon the Agency Record (“Def.‘s Brief“).
Stanley, in turn, challenges Commerce‘s refusal to correct what Stanley maintains is a “ministerial error” relating to the calculation of normal value for Stanley‘s nails. See generally Memorandum of Plaintiffs The Stanley Works (Langfang) Fastening Systems Co., Ltd. and The Stanley Works/Stanley Fastening Systems LP in
The Government maintains that the Final Results should be sustained in all respects, save one. See Def.‘s Brief; Defendant‘s Motion for Partial Voluntary Remand (“Def.‘s Remand Motion“). Specifically, the Government requests a partial voluntary remand to permit Commerce to reconsider the selection of financial statements used for Stanley‘s surrogate financial ratios in the Final Results. See generally Def.‘s Remand Motion. Mid Continent supports the Government‘s motion; Stanley opposes it. See generally Response of Mid Continent Nail Corporation to Defendant United States’ Motion for Partial Voluntary Remand (“Mid Continent Response to Def.‘s Remand Motion“); Plaintiffs’ Opposition to Defendant‘s Motion for Partial Voluntary Remand (“Stanley Response to Def.‘s Remand Motion“).
Jurisdiction lies under
I. Background
In September 2009, Commerce initiated its first administrative review of the antidumping duty order on certain steel nails from the People‘s Republic of China (“PRC“), covering the period of review January 23, 2008 to July 31, 2009. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 74 Fed.Reg. 48,224 (Sept. 22, 2009). Pursuant to its standard practice, Commerce issued questionnaires to the selected respondents, including Stanley, requesting information from Stanley, among others, about the factors of production consumed in the production of one kilogram of the subject merchandise i.e., finished nails that may be collated (strung together) into strips or coils using materials such as plastic, paper, or wire, to form strips or coils that can be loaded into a nail gun. See Response of Stanley to the Commerce Department‘s Antidumping Duty Questionnaire, Response to Section C (Pub.Doc. No. 159) (“Stanley‘s Response to Section C Questionnaire“); Response of Stanley to the Commerce Department‘s Antidumping Duty Questionnaire, Response to Section D (Pub.Doc. No. 160) (“Stanley‘s Response to Section D Questionnaire“).6 Stanley re-
The primary factor of production for nails is wire rod. See generally Surrogate Values for the Preliminary Results (Pub. Doc. No. 287) (“Surrogate Valuation Memorandum for the Preliminary Results“). To make nails, wire rod is drawn so that it becomes wire. Id. Nail manufacturers either draw the wire rod into wire in their own facilities or contract with companies (“tollers“) who draw wire rod into wire as needed. Id. In this case, Stanley explained that, as an integrated producer, it contracts with wire drawers to draw a portion of its wire rod into wire rather than itself drawing all of the wire rod that it requires. See Stanley‘s Response to Section D Questionnaire. In addition, Stanley stated that, although it was able to provide data for the “substantial majority” of its subcontractors, it was unable to obtain information from certain of these wire drawers about how much wire rod they consumed to produce the amount of wire supplied to Stanley. See Stanley‘s Response to Section D Questionnaire; Issues & Decision Memorandum at 33 n. 90 (comment 17).
Commerce also requested that Stanley report how much wire it used to produce its nails. See Supplemental Questionnaire for Section D (Pub.Doc. No. 233). Wire, in contrast to wire rod, is not a factor of production, but, rather, an “intermediate input.”7 See generally Surrogate Valuation Memorandum for the Preliminary Results. Stanley provided complete data for its wire consumption. See Part 2 of Supplemental Section D Questionnaire Response of Stanley (Pub.Doc. No. 253).
Commerce subsequently published its Preliminary Results. See generally Certain Steel Nails From the People‘s Republic of China: Notice of Preliminary Results and Preliminary Rescission, in Part, of the Antidumping Duty Administrative Review, 75 Fed.Reg. 56,070 (Sept. 15, 2010) (“Preliminary Results“). In the Preliminary Results, Commerce calculated a preliminary dumping margin for Stanley at 6.48% using “facts otherwise available” (or “neutral facts“) to fill the gaps in Stanley‘s wire rod data. See Preliminary Results, 75 Fed.Reg. at 56,077.8
Further, because valuing product-specific factors of production does not capture certain overall “general expenses and profits,” Commerce must separately reflect in the agency‘s calculation of normal value (1) factory overhead, (2) selling, general, and administrative expenses (“SG & A“), and (3) profit.
Between mid-November and mid-December 2010, Commerce conducted a “successful[]” verification of Stanley‘s factors of production and U.S. sales questionnaire responses, as well as the factors of production data from one of Stanley‘s unaffiliated wiredrawing subcontractors. See Final Results, 76 Fed.Reg. at 16,380; Issues & Decision Memorandum at 36 (comment 18). At verification, Stanley provided Commerce with further information and explanation regarding Stanley‘s missing factors of production data. See generally Verification Report for Stanley (Pub.Doc. No. 352).
Following issuance of the Preliminary Results and completion of verification, Commerce solicited and received administrative case briefs and rebuttal briefs from Mid Continent, Stanley, and other interested parties. Final Results, 76 Fed.
Also discussed in Mid Continent‘s administrative case brief was electricity. Mid Continent contended that the use of the March 2008 report by the Central Electricity Authority did not reflect the most contemporaneous information, and did not represent the best available information. See Mid Continent Case Brief at 53-54. According to Mid Continent, Commerce should have used data released in late March 2009 (which Mid Continent had placed on the record prior to filing its case brief), reflecting “updated electricity pricing in effect for a significant portion of the [period of review]” and “updated energy pricing” for certain Indian consumers. Mid Continent Case Brief at 53.
In addition, Mid Continent‘s administrative case brief challenged Commerce‘s reliance on Lakshmi‘s financial statement for use in calculating the financial ratios, and submitted certain financial data for Sundram Fasteners Ltd. (“Sundram“). See Mid Continent Case Brief at 6, 41-46; Mid Continent Surrogate Value Submission (Pub.Doc. No. 301) (exhibit including 2009 and 2010 Limited Annual Reports for Sundram). Mid Continent urged Commerce to use Sundram‘s data for purposes of the Final Results, emphasizing that like Lakshmi Sundram was a multi-national producer of fasteners, with a financial and production scale comparable to that of Stanley. See Mid Continent Case Brief; Mid Continent Surrogate Value Submission.
The Chinese respondents submitted other financial statements as possible sources for surrogate financial ratios, including statements from several significantly smaller Indian companies, including J & K Wire & Steel Industries (Pvt.) Ltd. (“J & K“), Bansidhar Granites Private Limited (“Bansidhar“), and Nasco Steels Private Ltd. (“Nasco“). See GDLSK Section A Client‘s Second Surrogate Value Submission at Exhs. 1-3 (Pub.Doc. No. 299) (financial statements of Bansidhar, J & K, and Lakshmi); Stanley Resubmission of Comments (Pub.Doc. No. 330) (financial statements for Nasco). In its administrative case brief and its rebuttal brief filed with the agency, Mid Continent argued that use of the financial statements of J & K, Bansidhar, and Nasco would be inappropriate. See generally Mid Continent Rebuttal Brief (Pub.Doc. No. 370). According to Mid Continent, unlike the companies whose financial statements Mid Continent placed on the record, the production and financial experience of J & K, Bansidhar, and Nasco bore no similarity to that of Stanley. See id. at 22-37.
After considering the evidence and arguments on the record, Commerce issued the Final Results of the administrative review. See generally Final Results, 76 Fed.Reg. 16,379. In the Final Results, Commerce declined to use the intermediate input methodology in calculating Stanley‘s normal value, and explained that it used facts otherwise available (i.e., neutral facts) rather than adverse facts available to fill the gaps in Stanley‘s data on wiredrawing factors of production. See Issues & Decision Memorandum at 32-36 (comments 17-18). The Final Results found that the use of adverse facts available was not warranted, because Stanley was forthcoming about the deficiencies in its factors of production data and because Commerce had not requested that Stanley make additional attempts to obtain the missing data or demonstrate that it had made such attempts. Commerce therefore did not conclude that Stanley had failed to cooperate by not acting to the best of its ability to comply with an agency request for information. See Issues & Decision Memorandum at 34 (comment 17).
As a surrogate value for electricity, the Final Results continued to use the data from India‘s Central Electricity Authority published in March 2008. Issues & Decision Memorandum at 15 (comment 5). Commerce explained that the rates in that publication reflected the rates in effect for more of the period of review than the rates contained in the March 2009 data that Mid Continent had placed on the record, and thus were more “contemporaneous.” Id.
Commerce also reviewed all five financial statements on the record and modified its financial ratio calculations, relying on the financial statements of Bansidhar, J & K, and Nasco. Issues & Decision Memorandum at 11-13 (comment 3). Commerce explained that each of the three companies is an integrated producer of nails, produces nails from steel wire rod, and has invested in the capital equipment necessary to produce nails from steel wire rod. Id. Commerce decided not to rely on Lakshmi‘s financial statement, because the agency had discovered evidence of a countervailable subsidy on the company‘s financial statements.9 Id. Commerce also declined to use Sundram‘s financial statements, explaining that Sundram is not an integrated producer of nails and does not consume steel wire rod in its production of nails. Issues & Decision Memorandum at 11 (comment 3).
Following issuance of the Final Results, Stanley submitted ministerial error allegations. See Stanley‘s Request for Correction of Significant Ministerial Errors (Pub.Doc. No. 387). Stanley alleged that the Final Results contained two ministerial errors. Id. Stanley first alleged that Commerce had inadvertently calculated depreciation using a “total” rather than an
This action ensued.
After briefing was complete on the merits of Mid Continent‘s challenge to the Final Results’ reliance on the financial statements of Bansidhar, Nasco, and J & K, Commerce in the second administrative review of the same antidumping duty order at issue here refined its practice for determining whether a company is a producer of “comparable” or “identical” merchandise for purposes of analyzing potential surrogates for financial ratios. See Issues and Decision Memorandum for Certain Steel Nails from the People‘s Republic of China: Final Results of the Second Antidumping Duty Administrative Review, 2012 WL 699520 at Comment 2 (Feb. 23, 2012) (“Decision Memorandum for Second Nails Review“). Thereafter, the Government requested a voluntary remand to allow Commerce to reevaluate its determination concerning surrogate financial ratios in this administrative review. See Def.‘s Remand Motion at 2-3.
II. Standard of Review
In an action reviewing an antidumping determination by Commerce, the agency‘s determination must be upheld except to the extent that it is found to be “unsupported by substantial evidence on the record, or otherwise not in accordance with law.”
III. Analysis
Dumping occurs when goods are imported into the United States and sold at a price lower than their “normal value,” resulting in material injury (or the threat of material injury) to the U.S. industry. See Taian Ziyang Food Co. v. United States, 35 CIT —, —, 783 F.Supp.2d 1292, 1299 (2011) (citing
Normal value is typically calculated using either the price in the exporting market (i.e., the price in the “home market” where the goods are produced) or the cost of production of the goods, when the exporting country is a market economy country. See generally
In cases such as this, where Commerce concludes that concerns about the sufficiency or reliability of the available data do not permit the normal value of the goods to be determined in the typical manner, Commerce “determine[s] the normal value of the subject merchandise on the basis of the value of the factors of production,” including “an amount for general expenses and profit plus the cost of containers, coverings, and other expenses.” See
In determining which data constitute the “best available information,” Commerce generally looks to the criteria set forth in
In assessing data and data sources, it is [Commerce‘s] stated practice to use investigation or review period-wide price averages, prices specific to the input in question, prices that are net of taxes and import duties, prices that are contemporaneous with the period of investigation or review, and publicly available data. See Import Administration Policy Bulletin 04.1, Non-Market Economy Surrogate Country Selection Process, at “Data Considerations” (March 1, 2004).11
Within this general framework, the statute “accords Commerce wide discretion in the valuation of factors of production in the application of [the statute‘s] guidelines.” See Shakeproof, 268 F.3d at 1381; see also Ad Hoc Shrimp Trade Action Committee v. United States, 618 F.3d 1316, 1320 (Fed. Cir. 2010); Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1377 (Fed. Cir. 1999). Commerce is recognized as the “master of antidumping law.” See Thai Pineapple Public Co. v. United States, 187 F.3d 1362, 1365 (Fed. Cir. 1999); see also Shakeproof, 268 F.3d at 1381 (acknowledging: “Commerce‘s special expertise“). And “[t]he process of constructing foreign market value for a producer in a non-market economy country is difficult and necessarily imprecise.” Id.
Nevertheless, Commerce‘s discretion is not boundless. In exercising its discretion, Commerce is constrained by the purpose of the antidumping statute, which is “to determine antidumping margins ‘as accurately as possible.‘” See Shakeproof, 268 F.3d at 1382 (quoting Lasko Metal Products, Inc. v. United States, 43 F.3d 1442, 1446 (Fed. Cir. 1994)). And, Commerce‘s discretion notwithstanding, “a surrogate value must be as representative of the situation in the [non-market economy] country as is feasible.” See Nation Ford, 166 F.3d at 1377. Thus, “[i]n determining the valuation of ... factors of production, the critical question is whether the methodology used by Commerce is based on the best available information and establishes antidumping margins as accurately as possible.” See Ningbo, 580 F.3d at 1257 (emphases added) (quoting Shakeproof, 268 F.3d at 1382).
In the present case, Stanley and Mid Continent challenge multiple aspects of Commerce‘s Final Results in the first administrative review of steel nails from the PRC. As discussed in greater detail below, Commerce‘s decisions not to use intermediate input methodology, not to apply adverse facts available, and not to “correct” an alleged ministerial error must be sustained. See sections III.A, III.B & III.E, infra. On the other hand, Commerce‘s selection of sources for Stanley‘s surrogate financial ratios and Commerce‘s valuation of Stanley‘s electricity must be remanded to the agency for further consideration. See sections III.C & III.D, infra.
Mid Continent challenges Commerce‘s normal value calculation for Stanley‘s nails, arguing that in light of Stanley‘s missing factors of production data Commerce erred by applying its “factors of production” methodology, and instead should have used the agency‘s “intermediate input” methodology. See generally Mid Continent Brief at 7-11; Mid Continent Reply Brief at 1-4. Mid Continent contends that this case fits comfortably within both of the two exceptions to Commerce‘s standard factors of production methodology. See Mid Continent Brief at 8-11; Mid Continent Reply Brief at 2-4. However, for the reasons described below, Mid Continent‘s arguments must be rejected.
In NME antidumping proceedings, Commerce typically “determine[s] the normal value of the subject merchandise on the basis of the value of the factors of production ... based on the best available information regarding the values of such factors in a market economy country.”
There are two exceptions to Commerce‘s factors of production methodology that can give rise to a need for the intermediate input methodology the insignificant share exception and the significant element exception. See Issues & Decision Memorandum at 35 (comment 18) (discussing two exceptions); see also Issues and Decision Memorandum for Antidumping Duty Investigation of Certain Frozen Fish Fillets from the Socialist Republic of Vietnam, 2003 WL 24153843 at Comment 3 (June 23, 2003) (“Fish Fillets Decision Memorandum“) (same); Issues and Decision Memorandum for the Final Determination in the Antidumping Duty Investigation of Certain Ball Bearings and Parts Thereof from the People‘s Republic of China, 2003 WL 24153825 at Comment 6 (March 6, 2003) (“Ball Bearings Decision Memorandum“) (same); Zhengzhou Harmoni Spice Co., 33 CIT at 461 n. 14, 617 F.Supp.2d at 1292 n. 14 (same). As detailed below, neither exception applies here.12
Mid Continent contends that Commerce should have applied the intermediate input methodology based on the insignificant share exception. See Mid Continent Brief at 8-9; Mid Continent Reply Brief at 3. Commerce invokes the insignificant share exception as an alternative to the agency‘s standard factors of production methodology where “the factors [of production] used to produce an intermediate input represent a small or insignificant share of total output” and where the improvement to the overall accuracy of the normal value calculation “will be too small to justify the burden of valuing the factors.” Issues & Decision Memorandum at 35 (comment 18).
Mid Continent‘s argument for the application of the exception is that the wiredrawing services of Stanley‘s subcontractors constituted an insignificant share of total output cost. See Mid Continent Brief at 9 (arguing that, “based on the database that [Commerce] used for its Preliminary Results,” wiredrawing services “by no means constitute[d] a significant share of the total output cost“); see also Mid Continent Reply Brief at 3.13 However, in making its argument, Mid Continent misapplies the requirements for the insignificant share exception by focusing solely on whether one of the factors of production (wiredrawing services) was insignificant, rather than on whether the factors of production, taken together, represented such an insignificant share of total output that calculating values for each of them would not be worthwhile in valuing the intermediate input wire.
The insignificant share exception does not apply merely because, as Mid Continent contends, one of the factors of production (wiredrawing services) for the intermediate input (drawn wire) represented an insignificant share of total output. When considering whether to apply the insignificant share exception, Commerce focuses on the significance of the intermediate input itself (or, in other words, all of the factors of production that make up the intermediate input), not on the significance of any one particular factor of production used to produce the intermediate input. See Stanley Response Brief at 23. As stated in Wooden Bedroom Furniture from the PRC, Commerce “appl[ies] a surrogate value to an intermediate input”
when the intermediate input accounts for an insignificant share of total output, and the potential increase in accuracy to the overall calculation that results from valuing each of the [factors of production] is outweighed by the resources, time, and burden such an analysis would place on all of the parties to the proceeding. Issues and Decision Memorandum for the Final Results of Antidumping Duty Administrative Review and New Shipper Review of Wooden Bedroom Furniture from the People‘s Republic of China, 2008 WL
concluding that the amount of missing wiredrawing data was small. Id. at 4. Yet the missing portion of data represented less than one-third of the wiredrawing costs, and by Mid Continent‘s own admission wiredrawing services accounted for an insignificant percentage of the normal value of Stanley‘s nails. See Mid Continent Amended Conf. Brief at 9; Mid Continent Conf. Reply Brief at 2-3; see also Stanley Conf. Response Brief at 22. Mid Continent‘s arguments are not persuasive.
Further, Mid Continent contends that, in refusing to apply the exception here, Commerce wrongly focused on whether wire rod represented a significant share of total output. Mid Continent Brief at 11 (stating that Commerce conducted “the wrong analysis” by noting that “the main factor used to value the intermediate good, drawn wire, is rod, which represents a significant share of total output“). But Mid Continent‘s argument is unavailing. By focusing on the significance of wire rod as a factor of production in its decision that the insignificant share exception does not apply here, Commerce indicated that not all of the factors used to produce wire represent insignificant shares of total output, and that, accordingly, the insignificant share exception did not apply. Issues & Decision Memorandum at 35 (comment 18).15
In sum, Commerce reasonably found that, because the main factor of production (wire rod) for the intermediate input (drawn wire) “represents a significant share of total output,” the insignificant share exception did not apply and could not justify a departure from the agency‘s standard factors of production methodology. Issues & Decision Memorandum at 35-36 (comment 18). Mid Continent‘s argument to the contrary is without merit.
2. The Significant Element Exception
Mid Continent also contends that Commerce should have applied the intermediate input methodology based on the significant element exception. See Mid Continent Brief at 8-11; Mid Continent Reply Brief at 2-3, 4. Commerce invokes the significant element exception where a significant portion of the costs of the factors of production for an intermediate input cannot be accounted for by Commerce. Issues & Decision Memorandum at 35 (comment 18). Mid Continent‘s argument for the second exception is that the intermediate input methodology should be applied because factors of production data were missing for what Mid Continent contends was a significant portion of the wire consumed by Stanley. Mid Continent Brief at 8-11; Mid Continent Reply Brief at 2-3, 4.16 However, Commerce‘s decision to reject the significant element exception as a basis for departing from the agency‘s standard factors of production methodology was reasonable.
In sum, Commerce reasonably found that neither of the two exceptions was applicable here, and that, based on agency practice, it would not be appropriate to apply the intermediate input methodology given the circumstances of this case. Mid Continent‘s arguments for use of Commerce‘s intermediate input methodology therefore must be rejected.
B. Adverse Facts Available
Mid Continent also contests Commerce‘s decision not to apply adverse facts available to Stanley‘s missing wiredrawing factors of production. See generally Mid Continent Brief at 12-19; Mid Continent Reply Brief at 4-7. Mid Continent argues that Stanley improperly withheld factors of production data. See Mid Continent Brief at 12, 14-18; Mid Continent Reply Brief at 4-7. Mid Continent further contends that Commerce‘s decision not to apply adverse facts available here was inconsistent with its decisions in other administrative proceedings. See Mid Continent Brief at 18-19. In addition, Mid Continent asserts that Commerce‘s choice of data to replace the missing wiredrawing factors of production was not based on substantial evidence. See Mid Continent Brief at 12-14; Mid Continent Reply Brief at 6. However, for reasons discussed below, Mid Continent‘s arguments are without merit.
When an interested party or any other person withholds information requested by Commerce, fails to provide requested information by the relevant deadline or in the manner and form requested, significantly impedes a proceeding, or provides information that cannot be verified, or when necessary information is for some other reason not available on the record of a proceeding, Commerce is authorized to fill in the information gaps using “facts otherwise available” (i.e., facts that substitute for missing information).
Mid Continent asserts that, contrary to Commerce‘s finding, Stanley did not act to the best of its ability to cooperate with Commerce, and withheld factors of production data for at least one of its unaffiliated wiredrawing subcontractors. See Mid Continent Brief at 12, 14-18; Mid Continent Reply Brief at 4-7.17 However, record evidence supports Commerce‘s determination. From the beginning of Commerce‘s individual investigation of Stanley, Stanley was forthcoming with Commerce about the factors of production data that it possessed for the subcontractor in question and the reason why it was not submitting that data. For instance, in response to a questionnaire from Commerce, Stanley reported that despite multiple attempts it had been unable to obtain information that would allow it to verify the factors of production data that it possessed for the subcontractor. Supplemental Questionnaire for Section D at 12-13 (Conf.Doc. No. 109).18 Similarly, Stanley explained that it would have essentially been impossible to obtain the requested information from another of its subcontractors. Id.19 In light of Stanley‘s forthcoming response to Commerce‘s only questionnaire requesting factors of production data on Stanley‘s wiredrawing subcontractors, and in light of Stanley‘s multiple attempts to obtain verifiable data, it cannot be said that Commerce erred in concluding that Stanley cooperated with the agency and acted to the best of its ability.20
As Commerce explained here, “the extent by which the respondents failed to provide [factors of production] data [in Activated Carbon from the PRC] was much more significant than Stanley‘s inability to obtain [factors of production data] from certain wiredrawing subcontractors.” Issues & Decision Memorandum at 34 (comment 17). In Activated Carbon from the PRC, a respondent failed to report factors of production data from two direct and three indirect suppliers, and Commerce applied partial adverse inferences for the missing data. Activated Carbon Decision Memorandum, 2007 WL 765248 at Comment 20. The situation here involves fewer subcontractors. Id.21 In addition, the respondent in Activated Carbon from the PRC failed to provide factors of production data for the producers of the subject merchandise itself, while, in this case, Stanley did not provide factors of production data for part of its production process that is subcontracted out to unaffiliated parties. Issues & Decision Memorandum at 34. In other words, Commerce here determined that it is more problematic when factors of production data are missing for the entire product (as in Activated Carbon from the PRC) than when factors of production data are missing for part of the production process (as in the instant case). Compare Activated Carbon Decision Memorandum, 2007 WL 765248 at Comment 20 with Issues & Decision Memorandum at 34. Based on these considerations, Commerce reasonably concluded that the result in Activated Carbon from the PRC is not controlling here.
Mid Continent‘s reliance on two other administrative determinations is similarly misplaced. See Mid Continent Brief at 18 (citing Issues and Decision Memorandum for the Administrative Review of Certain Cased Pencils from the People‘s Republic of China; Final Results, 2002 WL 1732817 at Comment 10 (July 25, 2002) (“Cased Pencils Decision Memorandum“); Notice of Final Determination of Sales at Less Than Fair Value: Creatine Monohydrate From the People‘s Republic of China, 64 Fed.Reg. 71,104, 71,109 (Dec. 20, 1999) (“Creatine Monohydrate Final Determination“)). In Cased Pencils from the PRC and Creatine Monohydrate from the PRC as in Activated Carbon from the PRC the non-cooperating suppliers were producers of the subject merchandise itself, not pro-
ducers of components of the subject merchandise. Further, in Creatine Monohydrate from the PRC, there was no indication that the respondents had even tried to obtain data from their suppliers. See Creatine Monohydrate Final Determination, 64 Fed.Reg. at 71,108-09. In this case, the two suppliers at issue were producers of components (wiredrawing services) of the subject merchandise, and Stanley made a concerted effort to obtain verifiable factors of production data from them. Thus, neither of the cases supports Mid Continent‘s claim.
As Commerce noted in its Issues and Decision Memorandum, the agency‘s analysis here “closely mirrors” that in its previous determination in yet another administrative review, Tapered Roller Bearings from the PRC. See Issues & Decision Memorandum at 33-34 (comment 17); Issues and Decision Memorandum for the Final Results of Antidumping Review on Tapered Roller Bearings from the People‘s Republic of China, 2009 WL 170611 at Comment 4 (Jan. 13, 2009) (“Tapered Roller Bearings Decision Memorandum“). Tapered Roller Bearings from the PRC is analogous to the instant case because the respondent in that case, as in this one, was forthcoming about its inability to obtain factors of production data from subcontractors, and Commerce found that the respondent did not impede the proceeding. Compare Issues & Decision Memorandum at 33-34 with Tapered Roller Bearings Decision Memorandum, 2009 WL 170611 at Comment 4. Moreover, Tapered Roller Bearings from the PRC is also analogous to the instant case because, in both cases, “the missing [factors of production] were not for complete production of a product, but rather for a stage in the production process that is subcontracted out to unaffiliated parties.” Issues & Decision Memorandum at 34; Tapered Roller BearingsDecision Memorandum, 2009 WL 170611 at Comment 4.
Mid Continent‘s claim that Commerce‘s choice of data to replace the missing wiredrawing factors of production data was not based on substantial evidence is also unavailing. Mid Continent Brief at 12-13. Mid Continent faults Commerce for the assumption that the subcontractors whose data were missing from the record had production operations identical or comparable to the three subcontractors whose data were on the record. Id. at 13. According to Mid Continent, the subcontractors whose data were on the record had “significantly different” production experiences, resulting in “significantly different production efficiencies among them.” Id. Specifically, Mid Continent contends that these subcontractors had meaningful differences in their drawn wire yield rates (i.e., the quantity of wire produced from a given quantity of rod) and in their consumption of various inputs. Id. Based on these considerations, Mid Continent concludes that Commerce unreasonably assumed that the data on the record for Stanley‘s wiredrawing subcontractors were appropriate to replace the missing data. Id. at 14.
However, since Commerce had already decided not to apply adverse facts available to substitute for the missing data, Commerce was simply looking for neutral data to fill the information gap. The weighted average of the three subcontractors’ data on the record constituted a reasonable substitute for the missing data because they were reflective of the majority of Stanley‘s wiredrawing services data, which was already on the record.
In short, Commerce reasonably declined to apply adverse facts available because Stanley had cooperated with Commerce. Mid Continent‘s arguments to the contrary notwithstanding, Commerce‘s determina-
C. Surrogate Financial Ratios
In its Final Results, Commerce concluded that it could no longer use Lakshmi‘s financial statement as a source for surrogate financial ratios in the underlying review, because the agency had identified evidence of countervailable subsidies in Lakshmi‘s statement. See Issues & Decision Memorandum at 10-11 (comment 3). After reviewing the other potential sources on the record, Commerce ultimately settled on the financial statements of three small Indian companies J & K, Bansidhar, and Nasco. See Issues & Decision Memorandum at 9-13.
Mid Continent takes strong exception to Commerce‘s decision to rely on the financial statements of J & K, Bansidhar, and Nasco, and objects to the agency‘s rejection of the financial statements of Sundram and Lakshmi. See generally Mid Continent Brief at 2, 6-7, 19-27; Mid Continent Reply Brief at 7-9. But see Def.‘s Response Brief at 9, 18-23; Stanley Response Brief at 15, 30-38. In any event, the Government now has requested a voluntary remand to allow Commerce to reconsider its position on the selection of financial statements, in light of recent intervening developments. See generally Def.‘s Remand Motion. As discussed below, that request has merit and must be granted.
When constructing normal value for a foreign producer in a NME country, Commerce bases its determination on “the value of the factors of production utilized in producing the merchandise.”
In the Final Results, Commerce explained its reasons for rejecting Sundram as a source for surrogate financial ratios:
[H]aving an integrated wiredrawing process with [steel wire rod, or “SWR“] is key to reflect the production processes of [Stanley]. However, the record does not permit a conclusion that Sundram‘s production process mirrors Stanley Langfang‘s. First, nowhere in its financial statement does it indicate that Sundram consumes SWR. Its raw material consumption report lists only “steel” as an input. Thus, even though Sundram produces some comparable merchandise, [Commerce] cannot be certain that it uses the same primary raw material as Stanley Langfang, and thus cannot conclude Sundram‘s production process reflects that of [Stanley].
Issues & Decision Memorandum at 11 (comment 3). The Issues and Decision Memorandum further explains that Commerce rejected Sundram not only because, according to Commerce, Sundram “only produced comparable rather than identical merchandise,” but, in addition, because Sundram “also produced and sold a large array of products not comparable to subject merchandise.” Id. at 12.
The Final Results outlined as well Commerce‘s reasons for selecting the financial
Since the Preliminary Results, additional financial statements have been placed on the record, including those of Nasco, Bansidhar, and J & K. All three companies meet [Commerce‘s] surrogate value (“SV“) selection criteria, and all three produce nails from SWR [steel wire rod]. In the case of Nasco, it also appears to produce nails either from drawn wire and/or hot-rolled sheet, but nonetheless consumed SWR during the fiscal year.... Second, of the remaining potential surrogate companies, only Nasco, Bansidhar, and J & K produce nails and use SWR in the production process.
Issues & Decision Memorandum at 11-12 (comment 3). Commerce further noted that “Nasco, Bansidhar, and J & K have invested in equipment required to produce nails and use SWR similar to [Stanley], whereas the other potential surrogate companies [have] not.” Id. at 12. Reasoning that the financial ratios of companies that produce nails “are more appropriate to use than those of companies that do not produce nails” (apparently referring, perhaps mistakenly, to Sundram), Commerce concluded that it would use the financial statements of Nasco, Bansidhar, and J & K to calculate surrogate financial ratios for the Final Results. Id. at 12-13.
Noting that, in selecting sources of financial ratios, Commerce‘s general practice is to attempt to match the production experience of a surrogate company to the production experience of a respondent, Mid Continent argues that Commerce erred in using the financial statements of Bansidhar, J & K, and Nasco, because Mid Continent asserts their production and operational experiences were “fundamentally incomparable” to those of Stanley. Mid Continent Brief at 19-20; see also id. at 21-26; Mid Continent Reply Brief at 7-9. Mid Continent characterizes Bansidhar, J & K, and Nasco as “very small scale, private enterprises,” while Stanley is a “large, diversified multi-national corporation.” Mid Continent Brief at 21-22; see generally id. at 2, 6-7, 19-27; Mid Continent Reply Brief at 7-9.
Mid Continent points to the financial statements of Bansidhar, J & K, and Nasco as proof that “their business activities and financial performance have fundamentally little to do with the production of steel nails or comparable [merchandise].” Mid Continent Brief at 22; see generally id. at 22-24.22 Mid Continent also criticizes Commerce as ignoring a laundry list of concerns that, Mid Continent contends, “undermin[e] the use of the Nasco, Bansidhar, and J & K financial statements” in the Final Results. Id. at 24-26; see also Mid Continent Reply Brief at 8.23
Moreover, just as Mid Continent contends that the profiles of Bansidhar, J & K, and Nasco rendered them inappropriate as sources for surrogate financial ratios, Mid Continent argues that Lakshmi and Sundram are “large, multinational fastener producers like Stanley,” with similar production experiences. See Mid Continent Brief at 26; see also Mid Continent Reply Brief at 8-9. Mid Continent asserts, inter alia, that the sales revenues and fixed assets of Stanley, Sundram, and Lakshmi confirm that Sundram and Lakshmi “operate at comparable scales of production, and use comparable processes, and thus are more representative of Stanley‘s production experience” than are Bansidhar, J & K, and Nasco, on which Commerce relied in the Final Results. See Mid Continent Brief at 26; see also Mid Continent Reply Brief at 8-9. Mid Continent therefore requests that Commerce be directed “to reject the use of Nasco‘s, Bansidhar‘s, and J & K‘s financial statements as surrogate financial ratios and [to] apply the more appropriate financial ratios from Lakshmi and/or Sundram.” See Mid Continent Brief at 26-27.
The Government and Stanley maintain that the financial statements of Bansidhar, J & K, and Nasco constitute the best available information for surrogate financial ratios and that their use by Commerce should be upheld as supported by substantial evidence and otherwise in accordance with law. See generally Def.‘s Brief at 9, 18-23; Stanley Response Brief at 15, 30-38.
The Government seeks to deflect Mid Continent‘s emphasis on the magnitude of the differences in the scale of the production and operations of Stanley on the one hand and Bansidhar, J & K, and Nasco on the other. Specifically, the Government notes that, in the Final Results, Commerce cited several administrative decisions for the proposition that, in essence, “size doesn‘t matter” (at least not necessarily) in surrogate selection. See Def.‘s Brief at 21-22 (citing Issues & Decision Memorandum at 11-13 (comment 3), and authorities cited there).24
In addition, the Government and Stanley particularly highlight Commerce‘s focus on the production of “identical” or “comparable” merchandise and the importance of the similarity of processes in the use of steel wire rod in the production of nails. See generally Def.‘s Brief at 9, 18, 20-22;
In any event, after briefing the issue on the merits, the Government filed a motion requesting a voluntary remand of this matter to permit Commerce to reconsider its determination in the Final Results. See generally Def.‘s Remand Motion. In its motion, the Government explains that, since issuing the Final Results in this first administrative review, Commerce now has issued its Final Results in the second administrative review, where Commerce examined whether Bansidhar was a producer of merchandise identical or comparable to that produced by Stanley. See Def.‘s Remand Motion at 2; see also Decision Memorandum for Second Nails Review, 2012 WL 699520 at Comment 2. In the second administrative review, Commerce “refined [its] practice with regard to how [it] determine[s] whether a company is a producer of ‘identical’ or ‘comparable’ merchandise.” Decision Memorandum for Second Nails Review, 2012 WL 699520 at Comment 2.25 In light of this policy refinement, the Government requests a remand in order to permit Commerce to reconsider the selection of surrogate financial ratios in this first administrative review. See Def.‘s Remand Motion at 2-3.
Stanley opposes the Government‘s motion for a voluntary remand, dismissing the issue of whether a company is a producer of “identical” or “comparable” merchandise as a “minor element” of Commerce‘s antidumping analysis, and asserting that the motion does not establish a “substantial and legitimate” concern within the meaning of SKF. See Stanley Response to Def.‘s Remand Motion at 1-3 (citing SKF USA Inc. v. United States, 254 F.3d 1022, 1029 (Fed. Cir. 2001) (citation omitted)).26 Stan-
Mid Continent, on the other hand, supports the Government‘s motion and argues that the Government‘s concerns are both substantial and legitimate. See Mid Continent Response to Def.‘s Remand Motion at 3-4. According to Mid Continent, “Commerce‘s recent refinement to its practice potentially will result in a change to the financial statements selected and the financial ratios calculated, thereby altering ... [the] final [dumping] margin.” See id. at 3. Mid Continent further notes that there is no “evidence that [the Government‘s] request for partial remand is motivated by bad faith or is frivolous in nature.” Id. at 3-4 (citing Clemmons v. West, 206 F.3d 1401, 1403-04 (Fed. Cir. 2000) (citation omitted)).
As Stanley suggests, it may be that Commerce‘s policy refinement will have no impact on the ultimate dumping margin in this case. But, at this point, no one can be certain. In this review, Commerce has considered the issue of whether a company produced “identical” or “comparable” merchandise to be a relevant factor in its selection of surrogate companies for financial ratios. For instance, Commerce rejected Sundram in part because it was a producer of “comparable,” not “identical,” merchandise. Issues & Decision Memorandum at 12 (comment 3) (explaining that Commerce found Sundram to “only produce[] comparable rather than identical merchandise“). Similarly, in the Preliminary Results, Commerce noted that it had selected Lakshmi, even though the company “produce[d] comparable rather than identical merchandise.” Surrogate Valuation Memorandum for the Preliminary Results at 15-16.
Thus, a change in the way the agency determines whether merchandise is “identical” or “comparable” conceivably could have implications for Commerce‘s ultimate determination in the underlying administrative review here. The Government‘s concern is clearly “substantial and legitimate.” See SKF, 254 F.3d at 1028 (explaining that a “remand is generally required if the intervening event may affect the validity of the agency action” (emphasis added)). A remand is therefore appropriate, to permit Commerce to reevaluate its determination in the Final Results concerning the selection of financial statements as sources for surrogate financial ratios, in light of the agency‘s recent policy refinement. On remand, Commerce shall consider anew all record evidence in light of, inter alia, the agency‘s updated policy and shall fully articulate the rationale for its determination on remand, and identify all relevant evidentiary support, whatever that determination may be.
D. Surrogate Values for Electricity
Mid Continent challenges Commerce‘s determination in the Final Results to value
Mid Continent contends that Commerce‘s determination concerning the relative contemporaneity of the two data sets is demonstrably “factually incorrect,” and that the Final Results on this point therefore are not supported by substantial evidence. See Mid Continent Brief at 27-28; Mid Continent Reply Brief at 9-11. Remand is necessary to allow Commerce to reconsider this issue and to clarify both its determination and the underlying rationale.
In selecting surrogate values, Commerce seeks the “best available information” in accordance with
We have followed the [surrogate value] selection [criteria] [i.e., public availability, contemporaneity, representativeness, and specificity, as well as whether the data are from an approved surrogate country and are exclusive of taxes and duties]. In the case of electricity, after reviewing both the 2008 and 2009 CEA data, we have determined that both values are publicly available, from an approved surrogate country, specific to the input in question, and ... broad-market averages. With respect to contemporaneity, ... the rates contained in the 2008 CEA data cover more of the [period of review] than do those of the 2009 data, and are thus more contemporaneous. Therefore, for the final results of this review, we have continued to value electricity using CEA data from 2008 because they best satisfy [Commerce‘s] [surrogate value] selection criteria.
Issues & Decision Memorandum at 15 (comment 5) (emphasis added).
The bases for Commerce‘s conclusion that the 2008 data are “more contemporaneous” than the 2009 data quoted above are entirely unclear. The 2008 data reflect effective tariff rates only through March 31, 2008, and the most recent data point for electricity pricing in the 2008 data is from May 2007. See Mid Continent Brief at 27; Mid Continent Reply Brief at 10; see also Mid Continent Case Brief at 53-54 (citing Surrogate Valuation Memorandum for the Preliminary Results at Exh. 46 (data table showing May 2007 as most recent effective date for tariff rates in 2008 data)). In contrast, the 2009
The Government attempts to defend Commerce‘s action in the Final Results by underscoring that the 2008 data “comprise over thirty pages of detailed ‘price data for small, medium, and large industries’ across an extensive range of geographical locations, whereas the 2009 data appear in summary form on a single page containing only a handful of data points.” See Def.‘s Brief at 24 (citing Surrogate Valuation Memorandum for the Preliminary Results at 11). The Government‘s observation may well have some bearing on the relative merits of the two data sets. However, it says nothing at all about the relative “contemporaneity” of the data, which was the basis for Commerce‘s selection of the 2008 data over the 2009 data in the Final Results. An agency determination cannot be sustained on the strength of a post hoc rationale supplied by litigation counsel. See Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962). As the Supreme Court has explained, “an agency‘s action must be upheld, if at all, on the basis articulated by the agency itself.” Motor Vehicle Manufacturers Ass‘n of the United States v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50 (1983).
The 2008 data may be superior in other respects yet to be detailed by Commerce. But the 2009 data appear to be more contemporaneous with the period of review at issue (January 23, 2008 to July 31, 2009). The plain meaning of “prices that are contemporaneous with the ... period of review” in this context is prices that are reflective of those actually in effect during the review period. Thus, a data set reflecting prices that were in effect for more months of the review period is more contemporaneous with the period of review than a data set reflecting prices that were in effect for fewer months of the review period. Based on this understanding, the 2009 data reflect tariff rates in effect for 13 of the 18 months of the period of review (i.e., late January 2008 through late March 2009), while the 2008 data cover less than two months of the period of review (i.e., late January 2008 through late March 2008). See Mid Continent Brief at 27.27
The Government argues that “issuing a subsequent edition [of data on electricity rates] does not affect the individual rates [in the prior publication] nor does it mean the rates in the prior publication are no longer effective.” Def.‘s Brief at 25. However, the Government‘s next statement that the subsequent edition “simply reports any new rates that came into effect after the earlier publication” does not support the Government‘s assertions that the 2008 data are more contemporaneous than the 2009 data. See id. Instead, that statement suggests that the 2009 data are more contemporaneous, because the “new rates that came into effect after the earlier publication” should make the 2009 data more aligned with the period of review.
In light of the discussion above, remand is warranted to permit Commerce to reconsider this issue, and to clarify its determination that the 2008 data are more contemporaneous than the 2009 data and to detail the bases therefor. If, upon review, Commerce concludes that the 2008 data are not more contemporaneous, Commerce shall determine which data constitute the “best available information” based on all relevant factors and shall explain why.
E. Ministerial Error Allegation
Stanley‘s sole remaining issue in this consolidated action is its “ministerial error” claim. The gravamen of this claim is that Commerce declined to correct “an error in [the agency‘s] computer program,” which according to Stanley therefore did not, as a general matter, properly calculate U.S. prices and normal value on the same weight basis. See generally Stanley Brief at 2, 3, 4-5, 10, 25-30, 31; Stanley Reply Brief at 14-15. But see Def.‘s Brief at 10, 31-37; Mid Continent Response Brief at 3-4, 20-24. According to Stanley, the effect of the error was to “overstate[] Stanley‘s normal values and increase[] the resulting dumping margin by about one percent ad valorem.” Stanley Brief at 26.
Specifically, Stanley contends that, due to a “missing instruction,” Commerce‘s computer program did not “adjust normal values to account for the fact that Stanley‘s per-kilogram normal values were computed using the weight of nails alone while its U.S. selling prices were converted from per-carton prices to per-kilogram prices using the combined weights of nails plus collating materials.” Stanley Brief at 2; see also id. at 3, 4-5, 25-26; Stanley Reply Brief at 14.28 Commerce‘s failure to
Stanley further argues that Commerce did not even address the ministerial error that Stanley actually alleged. Stanley Brief at 29-30; Stanley Reply Brief at 14; see generally Stanley‘s Request for Correction of Significant Ministerial Errors (Pub.Doc. No. 387). In other words, Stanley maintains, Commerce ended up “focus[ing] ... on an issue that Stanley did not raise” which was, Stanley contends, “the selection of the cartons-to-kilograms conversion denominator itself.” Stanley Brief at 29-30 (citing Amended Final Results, 76 Fed.Reg. at 23,280). But it was not Commerce‘s selection of the cartons-to-kilograms denominator that was the ministerial error, Stanley urges; rather, it was the “computer programming step that occurred after” Commerce selected the denominator. Stanley Brief at 30; Stanley Reply Brief at 14. Stanley concludes that, because Commerce focused on the wrong ministerial error allegation, Commerce‘s “denial of Stanley‘s correction request [was] therefore unreasonable.” Stanley Brief at 29.
Commerce then had to select a conversion factor. Def.‘s Brief at 33. In its questionnaire response, Stanley provided four different options for conversion factors, including CONGWGT3U (or “C3,” the weight of collated nails) and CONGWGT4U (or “C4,” the weight of collated nails minus the weight of collating materials). Id. & n. 5. According to Commerce, the agency decided to divide the price of each carton by the weight of collated nails, or C3, because “collating materials are part of the finished product.” Id. at 34. Finally, Stanley‘s dumping margin was calculated by subtracting the United States price from the normal value.
In Stanley‘s view, the alleged ministerial error was thus “an error in [Commerce‘s] computer program” because it did not account for the fact that Commerce “converted Stanley‘s ... U.S. selling prices to prices per kilogram using the combined weight of nails and collating materials contained in the carton,” while, in the meantime, Commerce “calculated per-kilogram normal values based on the weight of nails alone.” Stanley Brief at 25-26 (emphasis added).
Whether Commerce focused on the incorrect ministerial error allegation, or whether Commerce‘s alleged error was in fact a ministerial error at all (a point that the Government and Mid Continent dispute) is of no moment here, because Stanley failed to exhaust its administrative remedies. See Def.‘s Brief at 10 (arguing that Stanley is “characterizing,” post hoc, a substantive issue “as a ministerial error“), 36, 37 (same); Mid Continent Brief at 3-4, 22, 24 (same). For the reasons discussed below, Stanley‘s claim must fail.
To promote “transparency,” Commerce has a long-standing practice of disclosing to parties to an administrative review the details of the agency‘s antidumping calculations and affording them an opportunity to point out and request correction of any “ministerial errors” identified in the calculations. See generally
Pursuant to the regulations, when Commerce discloses its antidumping calculations to a party, the party has five days thereafter to file comments concerning any ministerial errors.
To similar ends, the Court of Appeals has instructed that interested parties “must point out any ministerial errors [concerning the preliminary results of a review] in their case briefs” filed with Commerce following the issuance of preliminary results. QVD Food Co. v. United States, 658 F.3d 1318, 1328 (Fed. Cir. 2011) (quoting
Here, Stanley failed to exhaust its administrative remedies by not timely and properly objecting to Commerce‘s choice of conversion factors in the Preliminary Results. See Def.‘s Brief at 31-32, 35, 36-37. Although Stanley was put on notice of Commerce‘s choice of conversion factors and programming code in the Preliminary Calculation Memorandum (referenced in the Preliminary Results), Stanley raised no objection within the five-day period for doing so. See Def.‘s Brief at 32, 34-35; Preliminary Results, 75 Fed.Reg. at 56,075-76;
Stanley‘s failure to raise any ministerial allegations at the time Commerce‘s calculations were disclosed, or even in its administrative case brief, is fatal to the claim that it seeks to press here. As the Court of Appeals has squarely held, “a ministerial error made by Commerce that was reflected in its preliminary antidumping duty determination need not be corrected [by Commerce] when no interested party pointed out the error in a timely manner.” QVD Food, 658 F.3d at 1328 (citing Dorbest Ltd. v. United States, 604 F.3d 1363, 1376-77 (Fed. Cir. 2010)). In Dorbest, the court explained that parties are “procedurally required to raise the[ir] issue before Commerce at the time Commerce [is] addressing the issue.” Dorbest, 604 F.3d at 1375 (quoting Mittal Steel Point Lisas Ltd. v. United States, 548 F.3d 1375, 1383 (Fed. Cir. 2008)) (internal quotation marks omitted). The Dorbest court instructed that “[t]his is because ‘[s]imple fairness to those who are engaged in the tasks of administration, and to litigants, requires as a general rule that courts should not topple over administrative decisions unless the administrative body not only has erred but has erred against objection made at the time appropriate under its practice.‘” Dorbest, 604 F.3d at 1375 (quoting United States v. L.A. Tucker Truck Lines, 344 U.S. 33, 37 (1952)).
In the case at bar, Stanley failed to assert its ministerial error allegation “at the time Commerce was addressing the issue” both within the specified five-day period following disclosure, and in its administrative case brief. Dorbest, 604 F.3d at 1375; Def.‘s Brief at 32, 35, 36-37.
In the Preliminary Calculation Memorandum, Commerce specifically identified its selection of CONWGT3U (the conversion factor) as “the most appropriate conversion weight to use,” stating that it “represents the weight of the finished nail plus any collating materials, reflecting the scope of the order and also the fact that collating materials are part of the finished product.” Preliminary Calculation Memorandum at 1-2. In addition, Commerce provided “over two hundred pages of detailed calculations” supporting its decision to use what the agency believed to be the most appropriate conversion factor. See Def.‘s Brief at 35. As such, “Commerce clearly gave Stanley ample opportunity to raise the issue after the Preliminary Results.” Def.‘s Brief at 36. Because it did not do so, Stanley failed to exhaust its administrative remedies and is thus barred from pursuing its claim of ministerial error in this forum.
IV. Conclusion
Stanley‘s Motion for Judgment on the Agency Record is denied, and Mid Continent‘s Motion for Judgment on the Agency Record is denied in part and granted in part. Further, the Government‘s Motion for Partial Voluntary Remand is granted. This matter is remanded to the Department of Commerce for further proceedings not inconsistent with this opinion. A separate order will enter accordingly.
UNITED STATES of America,
Plaintiff,
v.
AMERICAN HOME ASSURANCE CO., Defendant.
Slip Op. 14-7.
Court No. 10-00185.
United States Court of International Trade.
Jan. 23, 2014.
Notes
Documents in the public version of the administrative record are numbered sequentially, and are cited herein as “Pub. Doc. No. -.” Documents in the confidential version of the administrative record are also numbered sequentially, but differently from the public version. Documents in the confidential version of the administrative record are cited as “Conf. Doc. No. -.”
Mid Continent and Stanley filed both public and confidential versions of all briefs. Citations to briefs are to the public versions whenever possible, and except as specified. Citations to the confidential version of a brief are prefaced with “Conf.”
Mid Continent has elected not to pursue certain counts consolidated from Court No. 11-00119 specifically, Count IV (which challenged Commerce‘s selection of surrogate values for sodium hydroxide, labels, and shrink film), Count IX (which alleged that Commerce failed to properly calculate Stanley‘s reported U.S. indirect selling expenses), and Count X (which alleged generally that Commerce “erred in other aspects of the Final Results“). See Mid Continent Brief at 1 n. 2.
Mid Continent contends that Commerce failed to articulate a satisfactory rationale for rejecting complete data for wire that could have been used if Commerce had relied on the intermediate input methodology. Mid Continent Brief at 11. However, as Commerce explained in its Issues and Decision Memorandum, the amount of steel wire consumed by a company such as Stanley, which is an integrated producer, is not necessarily reflective of its costs. Def.‘s Brief at 15 (citing Issues & Decision Memorandum at 36). Based on this consideration and Commerce‘s “successful[]” verification of Stanley‘s subcontractor‘s wiredrawing factors of production, Commerce found use of Stanley‘s wire-drawing factors of production to be “more accurate” than Mid Continent‘s proposed intermediate input methodology. Issues & Decision Memorandum at 36 (comment 18). Mid Continent‘s contention that Commerce did not satisfactorily address why factors of production data are preferable to intermediate input data for Stanley thus has no merit.
In addition, Mid Continent argues that using Stanley‘s incomplete factors of production data “fundamentally inhibits the accuracy of the traditional factors of production methodology, and thus undermines the accuracy of the margin calculations.” Mid Continent Reply Brief at 2. Mid Continent faults Commerce for not articulating its reasons for
Stanley and its representatives have expended much effort and made repeated visits to the [[Confidential Data Deleted]] remaining sub-contractors that provided wire drawing services for which the Department requested [factors of production] data.... Despite the fact that wiredrawing is not [[[Confidential Data Deleted]]]‘s principal business, Stanley‘s representatives were able to obtain all of [[Confidential Data Deleted]]‘s wiredrawing [factors of production] data and most of the necessary accounting records for [[Confidential Data Deleted]]. However, despite repeated requests from Stanley‘s representative and three on-site meetings, company officials have repeatedly refused to provide the company‘s financial statements or certain additional accounting records that are necessary to confirming their data. Supplemental Questionnaire for Section D at 12-13.
The remaining wiredrawing sub-contractor, [[Confidential Data Deleted]] first refused to provide any production and cost data. Following repeated inquiries and three on-site meetings, [[Confidential Data Deleted]] demonstrated to Stanley‘s representatives that it exists as an informal business entity that operated under a business license borrowed from another company and that it did not have actual, separable accounting records. Supplemental Questionnaire for Section D at 13.