Clearon Corp. v. United States, Slip Op. 16 -110

• Decision Date: 23 November 2016
• Docket Number: Consol. Court No. 13-00073,Slip Op. 16 -110
• Parties: CLEARON CORP., and OCCIDENTAL CHEMICAL CORP., Plaintiffs, v. UNITED STATES, Defendant, and ARCH CHEMICALS, INC., and HEBEI JIHENG CHEMICAL CO., LTD., Defendant-Intervenors, and JUANCHENG KANGTAI CHEMICAL CO., LTD., Defendant-Intervenor.
• Court: U.S. Court of International Trade

CLEARON CORP., and OCCIDENTAL CHEMICAL CORP., Plaintiffs, v. UNITED STATES, Defendant,andARCH CHEMICALS, INC.,and HEBEI JIHENG CHEMICAL CO., LTD., Defendant-Intervenors,andJUANCHENG KANGTAI CHEMICAL CO., LTD., Defendant-Intervenor.

Slip Op. 16 -110 Consol. Court No. 13-00073

UNITED STATES COURT OF INTERNATIONAL TRADE

November 23, 2016

Before: R. Kenton Musgrave, Senior Judge

OPINION

[Sustaining second results of remand of sixth (2010-2011) administrative review of antidumping duty order on chlorinated isocyanurates from the People's Republic of China.]

James R. Cannon, Jr. and Ulrika K. Swanson, Cassidy Levy Kent (USA) LLP, of Washington, DC, for the plaintiffs.

Emma E. Bond, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for the defendant. On the brief were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was David Richardson, Senior Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington DC.

Gregory S. Menegaz, J. Kevin Horgan, and Alexandra H. Salzman, deKieffer & Horgan, PLLC, of Washington, DC, for the defendant-intervenor Juancheng Kangtai Chemical Co., Ltd.

Peggy A. Clarke, Law Offices of Peggy A. Clarke, of Washington, DC, for the defendant-intervenors Hebei Jiheng Chemical Co., Ltd. and Arch Chemical Co., Ltd.

Musgrave, Senior Judge: This opinion concerns the second redetermination ("RR2")¹ on the sixth (2010-2011) administrative review of chlorinated isocyanurates ("chlor-isos") from the People's Republic of China ("PRC") and will presume familiarity with the prior opinions on the matter.² The first opinion approved certain aspects of the methodology utilized by the defendant's International Trade Administration of the U.S. Department of Commerce ("Commerce" or "Department") but remanded for surrogate valuation of the normal value of subject merchandise, and the second remand was necessary for reconsideration, in relevant part, of Commerce's (1) selection of surrogate values for hydrogen gas and chlorine, (2) selection of the Philippines as the primary surrogate country; (3) selection of import data to value urea, (4) adjustment to the selling, general, and administrative (SG&A) expenses; and (5) methodology for calculating the by-product offset. Clearon II. On second remand, Commerce continues to find that the subject merchandise sales of Juangcheng Kangtai Chemical Co. Ltd. ("Kangtai"), and Hebei Jiheng Chemical Co., Ltd. ("Jiheng") were made for less than normal value ("NV") during the review period, i.e., June 1, 2010 to May 31, 2011 ("POR"). RR2 at 1. The defendant-intervenors, Arch Chemicals, Inc. and Jiheng (together "Arch-Jiheng") and Kangtai, argue for further remand. The plaintiffs, Clearon Corp. and Occidental Chemical Corp. (together, "Clearon"), argue for sustaining the remand results, as does the defendant. For the following reasons, the second remand results will be sustained.

Discussion

I. Surrogate Values for Hydrogen Gas and Chlorine

In the second remand results, Commerce continued to use the Philippines as the primary surrogate country, but given (1) a record of a "relatively small quantity" of hydrogen gas and chlorine imported into the Philippines during the POR, (2) prior reviews having found that those chemicals in particular are costly to transport over long distances, thus "greatly" adding to the cost of the inputs, and (3) no evidence on the record of this review to indicate that the nature of transporting these two inputs had changed from the previous review, Commerce selected Indian domestic data pertaining to Indian producers of hydrogen gas and chlorine as "[t]he only remaining source of evidence available on the record" to value those inputs. Id. at 21-23; see also PDoc 104 at 4 & n.10. Clearon's comments support Commerce's redetermination on this issue.

Arch-Jiheng attempts a number of different avenues to argue that Commerce's determination is not supported by substantial evidence on the record: (1) Commerce's general preference for domestic prices applies only to pricing in the primary surrogate country, (2) there is no record evidence showing that hydrogen import data is unreliable, (3) the petitioners never raised the issue of hydrogen transportation costs in the instant review, (4), despite Commerce's exhaustion argument, Arch-Jiheng argues it did not fail to raise the issue of Commerce's "hazardous nature" language with respect to both hydrogen gas and chlorine, (5) Commerce has used import values for hydrogen gas in all subsequent reviews³, (6) Jiheng's proposal to use import values is consistent with Commerce's normal practice of not adjusting surrogate values for alleged differences in shipping costs, (7) there is no record evidence showing that hydrogen is not frequently traded on an international basis, (8) using Indian data was contrary to Commerce's preferences to use contemporaneous data from a single surrogate country, (9) and Commerce has not indicated what evidence on the record of this proceeding indicates that the import values of the primary surrogate country are not reliable. Arch-Jiheng RR2 Cmts at 21-30.

The court finds that these arguments either (1) overlook that Commerce's preference for domestic data from the primary surrogate country assumes ceteris paribus and is governed by whether those data are distorted, see, e.g., Rhodia, Inc. v. United States, 25 CIT 1278, 185 F. Supp. 2d 1343 (2001), which would also logically inform the choice between import data for the primary surrogate country or domestic data from a secondary surrogate country, (2) disregard the law of the case on this matter and/or incorrectly attempt to shift the burden of proof, (3) ask the court to substitute judgment for that of Commerce without persuading that Commerce's choice was unreasonable, see Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951) ("a court may [not] displace the [agency]'s choice between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo"), or (4) fail to acknowledge Commerce's explicit statements on particular subject(s). The cases to which Arch-Jiheng cites do not appear apposite to the propositions asserted, and substantial evidence of record supports Commerce's selection of surrogate values for hydrogen and chlorine gas.

II. Primary Surrogate Country Selection

A.

Kangtai continues to challenge Commerce's primary surrogate country selection of the Philippines over India. Kangtai RR2 Cmts at 5-20. Commerce explains that the choice was based on the Philippines being on the list of economically comparable surrogate countries at the same level of economic development as the PRC (the "OP List") while India was not. See generally id. at 14-21. The main difference on second remand is the use of Indian domestic data to value hydrogen gas and chlorine, but Commerce diminished the use of those inputs as accounting for only two of over 40 factors necessary for the production ("FOPs") of chlor-isos, depending on the producer's level of integration. RR2 at 15-16.

Kangtai here complains of what it considers an impossibly opaque task, of having to prove that the data for India outweigh the fact that India is not on the OP List. See Clearon II, Slip Op. 15-91 at 10-11. Specifically, Kangtai argues: (1) that the very fact that Commerce went outside the OP List for surrogate values for two important inputs shows that Kangtai met its initial burden of showing a lack of quality data for the Philippines and should have triggered a comparison of the quality of data for the Philippines against those of India on the record, and that it was improper for Commerce to avoid opining on the quality of the Indian data and instead place a greater, unspecified burden on Kangtai as opposed to engaging in the analysis "directed by" the second remand order; (2) that Commerce's articulated standard essentially equates "quality" as "quantity" or "availability," which is contrary to quality's plain meaning as "degree of excellence" or "superiority in kind", (3) that Commerce's justification on remand is simply that as long as the Philippines has data for an input, it is by definition of "higher quality" than the India data and Commerce need not even consider relying on India as a surrogate source; (4) that such a standard cannot be squared with Commerce's own policy statement discussing quantity and quality as two separate aspects of data consideration, either of which could necessitate having to look at off-list country data;⁴ (5) that Commerce continues to conflate data quality and economic comparability notwithstanding the second remand order's express rejection thereof and improperly burdens Kangtai with having to prove every one of the Philippine data of less quality than the Indian data; (6) that Kangtai did address FOPs beyond hydrogen and chlorine that were of lesser quality, including the reliability of the MVC financial statement, concerning which Kangtai further argues Commerce misapplied the reason-to-believe-or-suspect standard for finding distortion and that it, Kangtai, was not required to prove, nor was Commerce required to formally investigate, the actual extent to which MVC benefitted from its declared subsidy programs before concluding that the MVC data should be disregarded; (7) that the very same reasons Commerce offered for choosing Indian chemical inputs over South African import statistics in the Preliminary Results are true for the Philippines data as well, and with regard to the defendant's criticism that Kangtai made no record citation to the Philippines import data to show it also does not have detailed concentration levels, Kangtai replies that "[a]ny cursory understanding of the import statistics or Preliminary Results or a mere glimpse of...