Blue Field (Sichuan) Food Indus. Co. v. United States

• Decision Date: 14 November 2013
• Docket Number: Court No. 12–00320.,Slip Op. 13–142.
• Citation: 949 F.Supp.2d 1311
• Parties: BLUE FIELD (SICHUAN) FOOD INDUSTRIAL CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and Monterey Mushrooms, Inc., Defendant–Intervenor.
• Court: U.S. Court of International Trade

949 F.Supp.2d 1311

BLUE FIELD (SICHUAN) FOOD INDUSTRIAL CO., LTD., Plaintiff,
v.
UNITED STATES, Defendant,
and
Monterey Mushrooms, Inc., Defendant–Intervenor.

Slip Op. 13–142.
Court No. 12–00320.

United States Court of
International Trade.

Nov. 14, 2013.

[949 F.Supp.2d 1315]

Ronald M. Wisla and Lizbeth R. Levinson, Kutak Rock LLP, of Washington, DC, for plaintiff.

Melissa M. Devine, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Devin S. Sikes, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Michael J. Coursey and John M. Herrmann, Kelley Drye & Warren LLP, of Washington, DC, for defendant-intervenor.

OPINION AND ORDER
GOLDBERG, Senior Judge:

Plaintiff Blue Field (Sichuan) Food Industrial Co., Ltd. (“Blue Field”) contests a final determination of the Department of Commerce (“Commerce”) in the twelfth periodic administrative review of an antidumping duty order on preserved mushrooms from the People's Republic of China. Compl. ¶ 1, ECF No. 5; Certain Preserved Mushrooms from the People's Republic of China, 77 Fed.Reg. 55,808 (Dep't Commerce Sept. 11, 2012) (final admin. review) (“Final Results”). In the review, Commerce assigned Blue Field a 308.33% dumping margin, increased from 2.17% in the eleventh review. Final Results at 55,809; see also

[949 F.Supp.2d 1316]

Certain Preserved Mushrooms from the People's Republic of China, 76 Fed.Reg. 70,112, 70,113 (Dep't Commerce Nov. 10, 2011) (amended final admin. review).

In this appeal, Blue Field claims Commerce failed to ground its dumping margin in substantial evidence. More specifically, Blue Field argues Commerce selected aberrational surrogate values for rice straw and cow manure, two inputs in Blue Field's mushroom cultivation. The court is asked to remand the action to Commerce to reconsider the contested surrogate values and recalculate the dumping margin. Compl. 5.

The facts of the case are dense and technical. To guide the reader through the administrative jungle, the court divides its analysis into four parts. In Part I, the court explains Commerce's antidumping review procedures for products from nonmarket economies. The court also lists key events that occurred during the twelfth administrative review and summarizes relevant record data. In Part II, the court decides whether Blue Field exhausted its administrative remedies respecting a number of arguments made on appeal. In Part III, the court determines whether Commerce grounded its surrogate values for rice straw and cow manure in substantial evidence. The court provides remand orders in Part IV. Section 201 of the Customs Courts Act of 1980, 28 U.S.C. § 1581(c) (2006),¹ gives the court jurisdiction to hear the case.

I. BACKGROUND

Blue Field exports preserved mushrooms of the species Agaricus bisporus and Agaricus bitorquis, known otherwise as common table mushrooms. Final Results, 77 Fed.Reg. at 55,809. Since 1999, an antidumping order has covered these wares whether imported whole, sliced, diced, or as stems and pieces. Certain Preserved Mushrooms from the People's Republic of China, 64 Fed.Reg. 8308 (Dep't Commerce Feb. 19, 1999) (antidumping duty order). This case concerns an administrative review Commerce conducted for subject merchandise exported between February 1, 2010 and January 31, 2011 (the “period of review”). SeeFinal Results, 77 Fed.Reg. at 55,808.

A. The Administrative Review Process for Nonmarket Economy Goods

To calculate antidumping duty rates, Commerce applies the arithmetic outlined in Section 731 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1673 (2006).² Under the statute, Commerce subtracts a foreign product's “export price” (the product's price in the United States) or “constructed export price” from its “normal value” (the product's price or value in the producer's home country). The difference between these two values is the dumping margin Commerce assigns the product. 19 U.S.C. § 1677(35)(A); see also Mittal Steel Galati S.A. v. United States, 31 C.I.T. 1121, 1122–23, 502 F.Supp.2d 1295, 1297 (2007).³

The calculus grows considerably more complicated, however, when Commerce determines dumping margins for goods made in nonmarket economies. Goods produced in market economies usually carry a “normal value” equal to the goods' sale price in the country of manufacture. 19 U.S.C. § 1677b(a). The law tacitly assumes these

[949 F.Supp.2d 1317]

prices are set by market forces of supply and demand. In nonmarket economies, however, product prices are determined not solely by consumer tastes, but presumably by some government action. Hence, to determine the normal value of nonmarket economy goods for use in comparison to prices in the United States, Commerce disregards sales prices and estimates the market economy value of the nonmarket good's factors of production (or “inputs”). It then adds up those values, includes an amount to represent general expenses, profit, and other expenses, and adopts the sum as the good's constructed normal value. See id. § 1677b(c). The prices assigned to the inputs are called “surrogate values.”

When calculating surrogate values, Commerce first gathers production and sales data from the parties to an administrative review. See19 C.F.R. § 351.221 (2013). Commerce then selects surrogates from among data meeting certain statutory requirements: To the extent possible, surrogate values must (1) come from a market economy country that is (2) a significant producer of the subject good and (3) economically comparable to the foreign producer's country. See19 U.S.C. § 1677b(c)(4). Commerce's chosen surrogate must also constitute “the best available information” on the record regarding input prices. Id. § 1677b(c)(1).⁴ In other words, the surrogates must be suitable to yield accurate dumping margins. See Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed.Cir.1990).

Commerce may also review “benchmark” data to ensure the surrogate values it selects are reasonable. A benchmark is a product whose price roughly correlates with the price of an input assigned a surrogate value. Unlike surrogate values, however, benchmarks need not reflect the actual price of the inputs into foreign merchandise. Furthermore, benchmark data need not come from an economy comparable to the foreign producer's. See Peer Bearing Co.–Changshan v. United States, 35 C.I.T. ––––, ––––, 752 F.Supp.2d 1353, 1372 (2011). Benchmarks, of course, become less informative the greater the difference in the levels of development of the countries from which the data derive. See, e.g., Anshan Iron & Steel Co. v. United States, 27 C.I.T. 1234, 1248, 2003 WL 22018898 (2003). In sum, Commerce may use benchmark data if these data prove helpful in determining whether a surrogate value is aberrational, or, to quote the statute, not “the best available information” for valuing an input. Zhejiang Native Produce & Animal By–Prods. Imp. & Exp. Grp. Co. v. United States, 32 C.I.T. 673, 681, 2008 WL 2410210 (2008).

After combing through the parties' proposed surrogates and benchmarks, Commerce decides which data to use to value the exporter's inputs. Then it adds the surrogate values of all the inputs into the subject good, including costs, and produces the good's constructed normal value. Commerce next publishes its findings in preliminary results, to which parties respond in case briefs and rebuttals. 19 C.F.R. §§ 351.221 (review procedures), 351.309 (written argument). Final dumping margins issue after the record closes to

[949 F.Supp.2d 1318]

additional arguments and information. See id. § 351.221.

B. The Twelfth Administrative Review of the 1999 Antidumping Order

Following the pattern above, Commerce requested information from foreign and domestic producers during the twelfth administrative review. See Initiation of Antidumping Duty Administrative Reviews, 76 Fed.Reg. 17,825 (Dep't Commerce Mar. 31, 2011). In May 2011, Commerce selected Blue Field as a mandatory respondent. Respondent Selection Memorandum, PD I 23 (May 18, 2011), ECF No. 18 (Nov. 20, 2012). Blue Field, in turn, produced U.S. sales data and other information. Blue Field Questionnaire Response, PD I 44 (July 6, 2011), ECF No. 18 (Nov. 20, 2012) (“PD I 44”).

The following January, Monterey Mushrooms, Inc., a domestic producer and “interested party” under 19 U.S.C. § 1677(9), proposed surrogate prices for Blue Field's straw and manure inputs. Petitioner's Surrogate Comments at Exs. 3, 5, PD II 24 at bar code 3049889–01 (Jan. 6, 2012), ECF No. 18 (Nov. 20, 2012) (“PD II 24”). Monterey Mushrooms based its proposed surrogates on Colombian import prices listed in the Global Trade Atlas (“GTA”). The GTA valued cereal husk and fertilizer—each a substitute for rice straw or cow manure—at $1350.88 and $1337.94 per metric ton, respectively. See id. (prices in Colombian pesos); Pl.'s Reply Br. 8–9, ECF No. 36 (prices in U.S. dollars). Blue Field responded by proposing alternative surrogate values in two rebuttal submissions. Blue Field's Rebuttal Surrogate Comments at Ex. 1, PD II 35 at bar code 3051313–01 (Jan. 17, 2012), ECF No. 18 (Nov. 20, 2012) (“PD II 35”); Blue Field's Rebuttal Surrogate Comments at Ex. 1, PD II 43 at bar code 3059154–01 (Feb. 24, 2012), ECF No. 18 (Nov. 20, 2012) (“PD II 43”). It argued that Monterey Mushrooms' data were inferior to Blue Field's proposed surrogates, which provided prices specific to rice straw and cow manure. See PD II 43 at 3.

Notwithstanding Blue Field's efforts, Commerce adopted Monterey Mushrooms' Colombian surrogates in its preliminary results. See Certain Preserved Mushrooms from the People's Republic of China, 77 Fed.Reg. 13,264, 13,268 (Dep't Commerce Mar. 6, 2012) (prelim. results)...