Coal. of Am. Millwork Producers v. United States

• Decision Date: 15 June 2022
• Docket Number: Slip Op. 22-68,Court No. 21-00047
• Citation: 581 F.Supp.3d 1295
• Parties: COALITION OF AMERICAN MILLWORK PRODUCERS, Plaintiff, v. UNITED STATES, Defendant, and Araupel S.A., Defendant-Intervenor.
• Court: U.S. Court of International Trade

581 F.Supp.3d 1295

COALITION OF AMERICAN MILLWORK PRODUCERS, Plaintiff,

v. UNITED STATES, Defendant,andAraupel S.A., Defendant-Intervenor.

Slip Op. 22-68

Court No. 21-00047

United States Court of International Trade.

June 15, 2022

Timothy C. Brightbill, Laura El-Sabaawi, Elizabeth S. Lee, and Theodore P. Brackemyre, Wiley Rein LLP, of Washington, D.C., for Plaintiff Coalition of American Millwork Producers.

Ioana Cristei, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant United States. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Saad Y. Chalchal, Senior Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Craig A. Lewis, H. Deen Kaplan, Maria A. Arboleda, and Gregory M.A. Hawkins, Hogan Lovells US LLP, of Washington, D.C., for Defendant-Intervenor Araupel S.A.

OPINION

Choe-Groves, Judge:

Plaintiff Coalition of American Millwork Producers ("Coalition" or "CAMP") challenges the final negative determination by the U.S. Department of Commerce ("Commerce") on its antidumping duty petition alleging that wood mouldings and millwork products ("WMMP") imported from Brazil were being sold in the United States at less than fair value. See Wood Mouldings and Millwork Products from Brazil ("Final Determination"), 86 Fed. Reg. 70 (Dep't of Commerce Jan. 4, 2021) (final negative determination of sales at less than fair value; 2019), ECF No. 14-1; see also Issues and Decision Mem. for the Final Negative Determination in the Less-Than-Fair-Value Investigation of Wood Mouldings and Millwork Products from Brazil (Dec. 28, 2020) ("Final IDM"), ECF No. 14-2. Before the Court is the Coalition's Rule 56.2 Motion for Judgment on the Agency Record. See Pl.’s Rule 56.2 Mot. J. Agency R., ECF No. 19; see also Mem. Supp. Pl.’s Rule 56.2 Mot. J. Agency R. ("Pl.’s Br."), ECF Nos. 20, 21; Pl.’s Reply Br. ("Pl.’s Reply"), ECF Nos. 34, 35. Defendant United States ("Defendant") and Defendant-Intervenor Araupel S.A. ("Araupel") oppose the Coalition's Rule 56.2 Motion for Judgment on the Agency Record. See Def.’s Opp'n Pl.’s Rule 56.2 Mot. J. Agency R. ("Def.’s Resp."), ECF Nos. 28, 29; Def.-Interv. Araupel's Mem. Opp'n Pl.’s Rule 56.2 Mot. J. Agency R. ("Araupel's Resp."), ECF Nos. 26, 27. For the following reasons, the Court sustains the Final Determination.

ISSUES PRESENTED

The Court reviews the following issues:

1. Whether Commerce's decision to collapse Araupel and Braslumber Industria de Molduras Ltda./BrasPine Madeiras Ltda. into a single entity is supported by substantial evidence;

2. Whether Commerce's decision not to apply the major input rule to certain log purchases is supported by substantial evidence;

3. Whether Commerce's decision to revise Araupel's reported general and administrative expenses to account for fair value adjustments associated with the annual revaluation of standing trees in Araupel's unharvested forests is in accordance with the law and supported by substantial evidence; and 4. Whether Commerce's application of the Federal Reserve Bank of New York's short-term interest rate to calculate imputed credit expenses and inventory carrying costs is in accordance with the law.

BACKGROUND

An antidumping duty investigation requires Commerce to determine whether imports of the subject merchandise are, or are likely to be, sold in the United States at less than fair value. See 19 U.S.C. § 1673d(a)(1).¹ Commerce makes the less-than-fair-value determination by comparing the U.S. price of the subject merchandise, typically the export price, with its normal value counterpart in the foreign market. See id. §§ 1677a(a)–(b), 1677b(a)(1). The margin of dumping, if any, is the amount by which the normal value exceeds the U.S. price. See id. § 1677(35)(A).

In January 2020, Commerce initiated a less-than-fair-value investigation into WMMP from Brazil for the period covering January 1, 2019 through December 31, 2019. Wood Mouldings and Millwork Products from Brazil and the People's Republic of China, 85 Fed. Reg. 6502, 6502–03 (Dep't of Commerce Feb. 5, 2020) (initiation of less-than-fair-value investigations), PR 46.² Commerce selected Araupel, Braslumber Industria de Molduras Ltda. ("Braslumber"), and BrasPine Madeiras Ltda. ("BrasPine"), the three entities with the largest volume of subject merchandise entries into the United States during the period of investigation, as the mandatory respondents. WMMP from Brazil: Respondent Selection Mem. (Feb. 25, 2020) at 6, PR 73.

Commerce considered comments from interested parties, including comments submitted jointly by Braslumber and BrasPine stating that both companies operate their own production facilities, but they would likely be considered affiliated based on common ownership and collapsed under administrative practice due to extensive overlap of management and sales operations. Id. at 5; see also 19 U.S.C. § 1677(33) (definition of "affiliated"); 19 C.F.R. § 351.401(f) (collapsing regulation). Under Commerce's collapsing practice, when certain conditions are met, affiliated companies are collapsed (i.e., treated as a single entity), and assigned a single weighted-average dumping margin. See Koenig & Bauer-Albert AG v. United States, 24 CIT 157, 158, 90 F. Supp. 2d 1284, 1286 (2000) (citations omitted); see also Carpenter Tech. Corp. v. United States, 510 F.3d 1370, 1373 (Fed. Cir. 2007).

Between April 2020 and July 2020, the three mandatory respondents submitted responses to the antidumping duty questionnaires³ and to the supplemental questionnaires.⁴ Decision Mem. for Prelim.

Negative Determination in the Less-Than-Fair-Value Investigation of Wood Mouldings and Millwork Products from Brazil (Aug. 5, 2020) ("Prelim. DM") at 3, PR 313. The Coalition, Araupel, Braslumber, and BrasPine submitted pre-preliminary determination comments to Commerce. See CAMP's Pre-Preliminary Determination Comments (July 15, 2020), PR 298; Araupel's Pre-Preliminary Determination Comments (July 20, 2020), PR 309; Braslumber/BrasPine's Pre-Preliminary Determination Comments (July 21, 2020), PR 310. Commerce published its preliminary determination on August 12, 2020. Wood Mouldings and Millwork Products from Brazil ("Prelim. Determination"), 85 Fed. Reg. 48,667 (Dep't of Commerce Aug. 12, 2020), PR 325. As part of its preliminary consideration, Commerce collapsed all three mandatory respondents and considered them as a single entity. See Prelim. Affiliation & Collapsing Determination Mem. (Aug. 5, 2020), PR 314.

In reaching its preliminary collapsing determination, Commerce determined that Braslumber, BrasPine, Araupel, and a certain company ("Company X") holding a controlling stake in Araupel were all under one family's common control and thus were affiliated as a matter of law. Prelim. DM at 5; Prelim. Affiliation & Collapsing Determination Mem. at 5–6; see 19 U.S.C. § 1677(33)(A). Based on its analysis of the regulatory criteria for collapsing producers under 19 C.F.R. § 351.401(f) and the "totality of the circumstances," Commerce collapsed Araupel, Braslumber, and BrasPine and treated them as a single entity. Prelim. DM at 5; Prelim. Affiliation & Collapsing Determination Mem. at 6–11. Commerce calculated preliminary antidumping duty rates of zero percent for the collapsed mandatory respondents, resulting in a negative preliminary determination. See Prelim. Determination, 85 Fed. Reg. at 48,667.

For purposes of the preliminary dumping calculations, Commerce based normal value on "constructed value"⁵ because the collapsed entity did not have viable sales of the foreign like product in Brazil or in a third-country market. Prelim. DM at 12. In calculating constructed value, Commerce relied on the cost data reported by each of the mandatory respondents, with a few exceptions. Id. at 12–13. One exception involved certain annual revaluations of Araupel's biological assets, i.e., its unharvested forests and the logs harvested from its forests. Cost of Production & Constructed Value Calculation Adjustments for the Prelim. Determination Mem. (Aug. 5, 2020) ("Prelim. Cost Mem.") at 1–2, PR 322–23. These annual revaluations were not included in Araupel's costs reported to Commerce but were present in its books and records kept in the normal course of business. Id. Araupel's audited financial statements recognized the fair value adjustments for biological assets in accordance with Brazilian Generally Accepted Accounting Principles ("GAAP"). Id. Commerce adjusted Araupel's reported total cost of manufacturing preliminarily as well as Araupel's reported general and administrative ("G&A") expenses to account for the fair value adjustment related to harvested logs. Id.

Due to the COVID-19 pandemic, Commerce was unable to conduct onsite verification and instead issued verification questionnaires to Araupel and to Braslumber/BrasPine. See, e.g., Letter to Braslumber/BrasPine in Lieu of On-Site Verification (Oct. 14, 2020), PR 361. After the verification questionnaires and the preliminary determination were issued, interested parties submitted case and rebuttal briefs on the preliminary determination. Final IDM at 2–3; see, e.g., Braslumber/BrasPine's Case Br. (Nov. 13, 2020), PR 384; CAMP's Case Br. (Nov. 13, 2020), PR 385–86; Araupel's Rebuttal Br. (Nov. 23, 2020), PR 389.

The Coalition argued that: (1) Commerce should not collapse Araupel with Braslumber and BrasPine; (2) Commerce should apply the major input rule under 19 U.S.C. § 1677b(f)(3) to certain log purchases by Araupel because it is affiliated with its log supplier and logs are critical in the production of WMMP; (3) Commerce should use Araupel's reported G&A expenses and not decrease them by the annual fair value adjustment of Araupel's unharvested forests; and (4) in order to impute Araupel's...