Nantong Uniphos Chems. Co. v. United States, Slip Op. 19-156

• Decision Date: 10 December 2019
• Docket Number: Court No. 17-00151,Slip Op. 19-156
• Citation: 415 F.Supp.3d 1345
• Parties: NANTONG UNIPHOS CHEMICALS CO., LTD., Nanjing University of Chemical Technology Changzhou Wujin Water Quality Stabilizer Factory, and Uniphos, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Compass Chemical International LLC, Defendant-Intervenor.
• Court: U.S. Court of International Trade

415 F.Supp.3d 1345

NANTONG UNIPHOS CHEMICALS CO., LTD., Nanjing University of Chemical Technology Changzhou Wujin Water Quality Stabilizer Factory, and Uniphos, Inc., Plaintiffs,
v.
UNITED STATES, Defendant,
and
Compass Chemical International LLC, Defendant-Intervenor.

Slip Op. 19-156
Court No. 17-00151

United States Court of International Trade.

December 10, 2019

415 F.Supp.3d 1348

David J. Craven, Craven Trade Law LLC, of Chicago, IL, argued for Plaintiffs.

Kelly A. Krystyniak, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for Defendant. With her on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and L. Misha Preheim, Assistant Director. Of Counsel on the brief was Christopher Hyner, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

Jeffrey S. Levin, Levin Trade Law, P.C., of Bethesda, MD, argued for Defendant-Intervenor.

OPINION

Eaton, Judge:

This case involves the United States Department of Commerce's ("Commerce" or the "Department") investigation, and final affirmative dumping determination, for imports of 1-Hydroxyethylidene-1, 1-Diphosphonic Acid ("HEDP")¹ from the People's Republic of China ("China"), and the results of Commerce's remand.² See

415 F.Supp.3d 1349

1-Hydroxyethylidene-1, 1-Diphosphonic Acid From the People's Rep. of China , 82 Fed. Reg. 14,876 (Dep't Commerce Mar. 23, 2017) ("Final Determination"), amended by 82 Fed. Reg. 22,807 (Dep't Commerce May 18, 2017) ("Amended Final Determination") and accompanying Issues and Dec. Mem. (Mar. 20, 2017), P.R.³ 362 ("Final IDM"); Final Results of Redetermination Pursuant to Remand (Aug. 8, 2018), P.R.R. 11 ("Remand Results").

Plaintiffs are Nanjing University of Chemical Technology Changzhou Wujin Water Quality Stabilizer Factory ("Nanjing"), a producer and exporter of HEDP; its affiliate, Nantong Uniphos Chemicals Co., Ltd.⁴ ; and Uniphos, Inc., a U.S. importer (collectively, "Plaintiffs"). They contend that the dumping determination lacks the support of substantial evidence because the Department failed to use the "best available information," as required by the antidumping statute, to calculate (1) surrogate financial ratios, and (2) a surrogate value for ocean freight. See Pls.' Cmts. Remand Results, ECF Nos. 50 ("Pls.' Cmts.").

The United States ("Defendant"), on behalf of Commerce, and Defendant-Intervenor Compass Chemical International LLC ("Compass"), the petitioner and a U.S. producer of HEDP, urge the court to sustain the Remand Results. See Def.'s Resp. Pls.' Cmts. Remand Results, ECF No. 54 ("Def.'s Resp."); see also Def.-Int.'s Resp. Pls.' Cmts. Remand Results, ECF No. 55.

Jurisdiction is found under 28 U.S.C. § 1581(c) (2012) and 19 U.S.C. § 1516a(a)(2)(B)(i) (2012). For the reasons stated below, the court sustains the Remand Results.

BACKGROUND

On March 31, 2016, Compass filed an antidumping petition, asking Commerce to investigate imports of HEDP from China that allegedly were being sold, or were likely to be sold, at less than fair value. See Letter from Levin Trade Law, P.C. to Penny Pritzker, Sec'y of Commerce (Mar. 31, 2016), P.R. 1. On April 28, 2016, the Department commenced an investigation covering the period of July 1, 2015, through December 31, 2015, and selected two mandatory respondents to be investigated, one of which was Nanjing.⁵ See 1-Hydroxyethylidene-1, 1-Diphosphonic Acid From the People's Rep. of China , 81 Fed. Reg. 76,916 (Dep't Commerce Nov. 4, 2016) ("Preliminary Determination") and accompanying Prelim. Dec. Mem. (Oct. 27, 2016), P.R. 314 ("Prelim. Dec. Mem.") at 4.

I. Preliminary Determination

On November 4, 2016, the Department published its preliminary affirmative dumping determination. See Preliminary Determination, 81 Fed. Reg. at 76,916. In making its determination, Commerce selected Mexico as the primary surrogate country.⁶ See Prelim. Dec. Mem. at 10.

415 F.Supp.3d 1350

To determine the normal value of the subject chemicals, Commerce valued Nanjing's factors of production⁷ using Mexican surrogate data, to which it added an amount for "general expenses and profit." 19 U.S.C. § 1677b(c)(1)(B). To arrive at an amount for "general expenses and profit," Commerce calculated surrogate financial ratios (for factory overhead; selling, general, and administrative expenses; and profit) using the 2015 financial statements of two Mexican chemical companies: Grupo Pochteca, S.A.B. de C.V. ("Pochteca") and CYDSA S.A.B. de C.V. ("CYDSA").⁸ See Surrogate Values for the Prelim. Determination (Oct. 27, 2016), P.R. 320 at 5. This amount, based on the ratios, was then added to the values of the factors of production, resulting in the normal value of the imported merchandise. See 19 U.S.C. § 1677b(c)(1).

To determine U.S. price, Commerce made deductions for movement expenses, including ocean freight. See Prelim. Dec. Mem. at 19; Prelim. Results Analysis Mem. for [Nanjing] (Oct. 27, 2016), P.R. 323 at 2. Commerce determined a surrogate value for the ocean freight deduction based on four shipping price quotes obtained from a publicly available database known as the Descartes Carrier Rate Retrieval Database.⁹ See Prelim. Dec. Mem. at 24; Letter from Levin Trade Law, P.C. to Penny Pritzker, Sec'y of Commerce (Aug. 18, 2016), P.R. 147 Ex. 11 ("Descartes Data"). The Descartes database contained "international ocean freight rates offered by numerous carriers" for the period of investigation. See Prelim. Dec. Mem. at 24. Of the four Descartes price quotes, two listed several fees that were included in the quote, and two were less detailed, including only a "port surcharge fee." See Descartes Data.

II. Final Determination

On May 18, 2017, Commerce published the Final Determination, in which it continued to find that imports of HEDP from China were being sold, or were likely to be sold, in the United States at less than fair

415 F.Supp.3d 1351

value during the period of investigation. See Final Determination, 82 Fed. Reg. at 14,876.

For normal value, Commerce again used both Pochteca's and CYDSA's financial statements as the "best available information" to calculate surrogate financial ratios. See Surrogate Values for the Final Determination (Mar. 20, 2016), P.R. 374 at 3 & 375 (exhibits). To determine a surrogate value for ocean freight, Commerce also continued to use the four quotes from the Descartes database. See Final IDM at 20. Ultimately, Commerce calculated an antidumping duty rate of 63.80 percent for Nanjing. See Am. Final Determination, 82 Fed. Reg. at 22,808.

On June 16, 2017, Plaintiffs commenced this action to dispute the Final Determination. See Summons, ECF No. 1. Subsequently, Defendant filed, with Plaintiffs' consent, a remand request, seeking an opportunity to reconsider the surrogate value determinations disputed by Plaintiffs. Specifically disputed were (1) the Department's use of CYDSA's financial statement to calculate surrogate financial ratios, and (2) the alleged double-counting of fees and charges that were included not only in the ocean freight surrogate value, but also in the surrogate value for brokerage and handling.¹⁰ On May 10, 2018, the court granted the motion and remanded the Final Determination to Commerce. See Order dated May 10, 2018, ECF No. 35.

III. Remand Results

A. Surrogate Financial Ratios

The Department calculates surrogate financial ratios: (1) for factory overhead, Commerce divides a surrogate company's total factory overhead expenses by its total direct manufacturing expenses; (2) for selling, general, and administrative expenses, Commerce divides the surrogate's selling, general, and administrative costs by its total cost of manufacture; and (3) for profit, Commerce divides the surrogate's before-tax profit by the sum of direct manufacturing expenses, overhead, and selling, general, and administrative expenses. See Shanghai Foreign Trade Enter. Co. v. United States , 28 C.I.T. 480, 482, 318 F. Supp. 2d 1339, 1341 (2004). In the Remand Results, Commerce continued to use both Pochteca's and CYDSA's financial statements to calculate these ratios. See Remand Results at 3. The ratios for each company were converted into percentages, averaged, and then multiplied by the surrogate values for direct expenses, overhead, and selling, general, and administrative expenses. See Shanghai Foreign Trade Enter. Co. , 28 C.I.T. at 482, 318 F. Supp. 2d at 1341. The resulting amounts were then added to surrogate values for the factors of production to determine normal value. See 19 U.S.C. § 1677b(c)(1), (4).

B. Ocean Freight

In the Remand Results, Commerce found that it was possible that it had double counted some fees that appeared not only in the Descartes database, but also in the World Bank Doing Business Report that Commerce used to value brokerage and handling:

[Ocean] freight was valued using

...