Jiaxing Brother Fastener Co. v. United States

Decision Date06 February 2014
Docket NumberSlip Op. 14–12.,Court No. 12–00384.
Citation961 F.Supp.2d 1323
PartiesJIAXING BROTHER FASTENER CO., LTD., Plaintiff, v. UNITED STATES, Defendant.
CourtU.S. Court of International Trade

OPINION TEXT STARTS HERE

Gregory S. Menegaz, J. Kevin Horgan, and John J. Kenkel, deKieffer & Horgan of Washington, D.C., for Plaintiffs Jiaxing Brother Fastener Co., Ltd., aka Jiaxing Brother Standard Parts Co., Ltd., IFI & Morgan Ltd., and RMB Fasteners Ltd.

Jane C. Dempsey, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice of Washington, DC, for Defendant United States. With her on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Attorney in Charge. Of counsel on the brief was Daniel J. Calhoun, Office of the Chief Counsel, Import Administration, U.S. Department of Commerce of Washington, DC.

Frederick P. Waite and Kimberly R. Young for Vorys, Sater, Seymour and Pease LLP of Washington, D.C., for DefendantIntervenor Vulcan Threaded Products Inc.

OPINION and ORDER

GORDON, Judge:

This action involves the second administrative review conducted by the U.S. Department of Commerce (“Commerce” or Defendant) of the antidumping duty order covering steel threaded rod from the People's Republic of China (“PRC”). See Certain Steel Threaded Rod from the People's Republic of China, 77 Fed.Reg. 67,332 (Dep't of Commerce Nov. 9, 2012) (final results second admin. review) (“ Final Results ”); see also Issues and Decision Memorandum for Final Results of Second Administrative Review of Certain Steel Threaded Rod from the People's Republic of China, A–570–932 (Dep't of Commerce Nov. 5, 2012), available at http:// ia. ita. doc. gov/ frn/ summary/ PRC/ 2012– 27438– 1. pdf (last visited Jan. 31, 2014) (“ Decision Memorandum ”). The court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006),1 and 28 U.S.C. § 1581(c) (2006).

Before the court is the motion for judgment on the agency record of Jiaxing Brother Fastener Co., Ltd., aka Jiaxing Brother Standard Parts Co., Ltd. (Jiaxing Brother), IFI & Morgan Ltd. (“IFI”), and RMB Fasteners Ltd. (“RMB”) (collectively Plaintiffs) challenging Commerce's (1) selection of Thailand as the primary surrogate country, (2) surrogate valuation for steel wire rod and steel round bar, and (3) surrogate valuation for hydrochloric acid. Pls.' Mem. in Supp. of Mot. for J. on the Agency R. 2–4, ECF No. 25 (“Pls.' Br.”). For the reasons that follow, the court sustains Commerce's rejection of India as the primary surrogate country, but remands the selection of Thailand over the Philippines to Commerce for clarification or reconsideration as may be appropriate.

I. Standard of Review

For administrative reviews of antidumping duty orders, the U.S. Court of International Trade 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, 458 F.3d 1345, 1350–51 (Fed.Cir.2006). Substantial evidence has been described as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Dupont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed.Cir.2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). Substantial evidence has also been described as “something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence.” Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966). Fundamentally, though, “substantial evidence” is best understood as a word formula connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d ed. 2013). Therefore, when addressing a substantial evidence issue raised by a party, the court analyzes whether the challenged agency action “was reasonable given the circumstances presented by the whole record.” Edward D. Re, Bernard J. Babb, and Susan M. Koplin, 8 West's Fed. Forms, National Courts § 13342 (2d ed. 2013).

Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–45, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), governs judicial review of Commerce's interpretation of the antidumping statute. See United States v. Eurodif S.A., 555 U.S. 305, 316, 129 S.Ct. 878, 172 L.Ed.2d 679 (2009) (Commerce's “interpretation governs in the absence of unambiguous statutory language to the contrary or unreasonable resolution of language that is ambiguous.”).

II. Background

On May 27, 2011, Commerce initiated the second administrative review of Certain Steel Threaded Rod from the People's Republic of China, 74 Fed.Reg. 17,154 (Dep't of Commerce Apr. 14, 2009) (antidumping duty order), covering exporters RMB and IFI and their affiliated supplier Jiaxing Brother for the April 1, 2010 through March 31, 2011 period of review. See Certain Steel Threaded Rod from the People's Republic of China, 77 Fed.Reg. 27,022, 27,022 (Dep't of Commerce May 8, 2012) (prelim. results admin. review) (“ Preliminary Results ”). As part of that review, Commerce's Import Administration Office of Policy (“OP”) issued the following “non-exhaustive” list of potential surrogate countries proximate to the PRC on the basis of per capita gross national income (“GNI”) as reported in the World Bank's 2012 World Development Report:

Country

Per Capita GNI

China

$4,260

Philippines

$2,050

Indonesia

$2,580

Ukraine

$3,010

Thailand

$4,210

Peru

$4,710

Colombia

$5,510

South Africa

$6,100

Request for Surrogate Country Comments, at Att. I (Dep't of Commerce Nov. 18, 2011), PD 102, Joint App'x at JA–00021 to JA–00022 (“ Surrogate Country Memorandum ”); see Certain Steel Threaded Rod from the People's Republic of China, 77 Fed.Reg. 27,022, 27,025 (Dep't of Commerce May 8, 2012) (prelim. results admin. review) (“Preliminary Results”).2 The OP did not include India, the primary surrogate country used in the investigation, because its per capita GNI was $1,340.

Commerce then evaluated Global Trade Atlas (“GTA”) data and determined that the countries on the OP list “can be considered significant producers of comparable merchandise.” Preliminary Results, 77 Fed.Reg. at 27,025. With respect to reliability and availability of surrogate value data, and responding to Plaintiffs' arguments that India, not Thailand, was the appropriate surrogate country, Commerce stated:

Petitioner provided data for Thailand from GTA to value certain material inputs, and a financial statement from a Thai producer of comparable merchandise to calculate surrogate financial ratios. [Plaintiffs] provided GTA data for India, as well as various Indian government, non-governmental organization, and industry publications to value material inputs, energy, and movement expenses. In addition, [Plaintiffs] submitted Indian financial statements to calculate surrogate financial ratios. However, the Department has stated that “unless we find that all of the countries determined to be equally economically comparable are not significant producers of comparable merchandise, do not provide a reliable source of publicly available surrogate data or are unsuitable for use for other reasons, we will rely on data from one of these countries.” ... Because the Department finds that one of the countries from the Surrogate Country List [Thailand] meets the selection criteria, ... the Department is not considering India, a country not included in the OP memorandum, as the primary surrogate country.

Id. (footnote omitted).

Although Plaintiffs lost the preliminary surrogate country selection argument, they continued to press the argument for India in their case brief. Plaintiffs also supplemented the record with data from the Philippines and argued in the alternative that the Philippine surrogate data was the best available on the administrative record. Commerce did not agree, concluding that “Thailand offers superior quality of data for valuing the steel wire rod consumed by [Plaintiffs] and offers usable data to value all [factors of production] necessary for the final results.” Decision Memorandum at 12.

Relevant statutory and regulatory framework

In an antidumping duty administrative review, Commerce determines whether subject merchandise is being, or is likely to be, sold at less than fair value in the United States by comparing the export price (the price of the goods sold in the United States) and the normal value of the merchandise. 19 U.S.C. §§ 1675(a)(2)(A), 1677b(a). In the nonmarket economy context, Commerce calculates normal value using data from surrogate countries to value the factors of production. 19 U.S.C. § 1677b(c)(1)(B). Commerce must use the “best available information” in selecting surrogate data from “one or more” surrogate market economy countries. 19 U.S.C. § 1677b(c)(1)(B), (4). The surrogate data must “to the extent possible” be from a market economy country or countries that are (1) “at a level of economic development comparable to that of the nonmarket economy country” and (2) “significant producers of comparable merchandise.” 19 U.S.C. § 1677b(c)(4). Commerce has a stated regulatory preference to “normally ... value all factors in a single surrogate country.” 19 C.F.R. § 351.408(c)(2).

The statute does not define the phrase “level of economic development comparable to that of the nonmarket economy,” nor does it require Commerce to use any particular methodology in determining whether that criterion is satisfied. To fill this statutory...

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