Gold E. Paper (Jiangsu) Co. v. United States

• Citation: 918 F.Supp.2d 1317
• Decision Date: 17 June 2013
• Docket Number: Slip Op. 13–74.,Court No. 10–00371.
• Parties: GOLD EAST PAPER (JIANGSU) CO., LTD.; Ningbo Zhonghua Paper Co., Ltd.; and Global Paper Solutions, Plaintiffs, v. UNITED STATES, Defendant, and Appleton Coated LLC, et al., Defendant–Intervenors.
• Court: U.S. Court of International Trade

918 F.Supp.2d 1317

GOLD EAST PAPER (JIANGSU) CO., LTD.; Ningbo Zhonghua Paper Co., Ltd.; and Global Paper Solutions, Plaintiffs,

v.UNITED STATES, Defendant,andAppleton Coated LLC, et al., Defendant–Intervenors.

Slip Op. 13–74.

Court No. 10–00371.

United States Court of

International Trade.

June 17, 2013.

Daniel L. Porter, James P. Durling, Matthew P. McCullough and Ross Bidlingmaier, Curtis Mallet–Prevost, Colt & Mosle LLP, of Washington, D.C., for plaintiff.

Alexander V. Sverdlov, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant. With him on the brief were Stewart F. Delery, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Mykhaylo Gryzlov, Senior Attorney, and Melissa Brewer, Office of Chief Counsel for Import Administration, U.S. Department of Commerce.

William A. Fennell, Wesley K. Caine and Terence P. Stewart, Stewart & Stewart, of Washington, D.C., and Gilbert B. Kaplan, Daniel L. Schneiderman and Christopher T. Cloutier, King & Spalding, of Washington D.C., for defendant-intervenors.

OPINION

MUSGRAVE, Senior Judge:

Plaintiffs Gold East Paper (Jiangsu) Co., Ltd. (“Gold East”), Ningbo Zhonghua Paper Co., Ltd., and Global Paper Solutions (“GPS”) (hereafter “Plaintiffs” or “APP–China”) challenge the Department of Commerce's (“Commerce”) final determination in the antidumping investigation of Certain Coated Paper Suitable for High–Quality Print Graphics Using Sheet–Fed Presses from the People's Republic of China, 75 Fed.Reg. 59217 (Dept. Commerce, Sept. 27, 2010) Public Record Doc. (“PR”) 360, as amended by Certain Coated Paper Suitable for High–Quality Print Graphics Using Sheet–Fed Presses from the People's Republic of China: Amended Final Determination of Sales at Less than Fair Value and Antidumping Order, 75 Fed.Reg. 70203 (Dept. Commerce, Nov. 17, 2010), PR 369 (collectively, “Final AD Order”).

In their second amended complaint, plaintiffs press multiple causes of action, which are addressed below. Second Amended Complaint, dated December 19, 2012, and filed on January 10, 2013, ECF Doc. 114–1, at 9–12; see also Plaintiff's Reply Brief (“Pl's Reply”) at 1 (identifying which arguments plaintiff is no longer pursuing). Plaintiffs move for judgment under Rule 56.2, challenging the Final AD Order in five sections of their brief. Respondent Plaintiffs' Brief in Support of Their Motion for Judgment on the Agency Record (Confidential) (“Pl's Br.”) at 1–4.

Defendant–Intervenors Appleton Coated LLC, Newpage Corp., SAPPI Fine Paper North America, et al. (“Appleton”) cross-move for judgment under Rule 56.2, alleging that Commerce misclassified certain U.S. sales as Export Price transactions, not Constructed Export Price transactions due to the sales' locations and delivery terms. Appleton also claims that Commerce erred in determining the surrogate wage rate for purposes of its Non–Market Economy Normal Value calculations.

The government defends Commerce's findings generally, but does agree to a voluntary remand in order to review the computer programming and to make any changes required to correct any errors found. Due to the multitude of issues involved, the relevant facts are discussed with each issue separately.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). Commerce's final determination will be upheld unless it is found “to be 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).

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”). Commerce's interpretation will not be set aside unless it is “arbitrary, capricious, or manifestly contrary to the statute.” Chevron, 467 U.S. at 844, 104 S.Ct. 2778.

ANALYSIS

I. Commerce's Refusal to Use Market Economy Input Prices where Such Inputs did not Constitute More than 33 Percent of Plaintiffs' Purchases

In order to determine the proper antidumping margin, Commerce valued the raw material inputs used in the manufacture of the merchandise. Commerce decided not to use the market-economy (“ME”) price paid for those inputs where ME purchases made up less than 33% of those inputs. Instead, Commerce used a price based on the weighted-average ME price plus a surrogate value for the non-market economy (“NME”) purchases. Cmt. 18, Issues & Decision Memorandum (“I & D Memo”) (Sept. 20, 2010) PR 353 at 46. The record shows that 32.9% of certain disputed inputs were ME purchases. Pl's Br. at 23 (chart).

Commerce does not expressly defend the decision, but does defend the 33% policy as an “objective benchmark” which provides “consistency and predictability” in Commerce's determinations. Defendant's Response to Plaintiffs' and Defendant–Intervenors' Separate Motions for Judgment Upon the Administrative Record (“Deft's Br.”) at 44. Its brief summarizes the administrative history of the 33% policy and suggests that APP–China could have but failed to prove to Commerce that “case specific facts favor the application of a different threshold”.¹ In the I & D Memo, Commerce cites to prior cases where it applied the 33% policy, but a review of those cases does not reveal how close to 33% the ME input purchases were. See I & D Memo at 46, n. 140–141.

Under Commerce's regulations, it will “normally” use prices paid by NME producers to ME suppliers to value factors of production in Normal Value calculations. See19 C.F.R. § 351.408(c)(1). Commerce's policy implementing § 351.408(c)(1) is to use the ME purchase price to value the particular factor where the ME purchases are a “significant” or “meaningful” portion of the whole. See Antidumping Methodologies: Market Economy Inputs, etc., 71 Fed.Reg. 61716, 61716–19 (Dep't Comm. Oct. 19, 2006). Under this policy, the ME inputs constitute a “significant” or “meaningful” portion where they make up more than 33% of purchases of the input. Id., 71 Fed.Reg. at 61717–18. Above the 33% threshold, Commerce will use the ME price to value the entire quantity of inputs. Below that threshold Commerce will use a weighted average of the ME price for the ME portion and a surrogate value for the remainder as it did in this case.

The government argues that Shakeproof Assembly Comp. Div. of Ill. Tool Works, Inc. v. United States, 268 F.3d 1376 (Fed.Cir.2001), which predates Commerce's 33% policy, “upheld Commerce's determination that actual input prices will constitute the ‘best information available’ only if they are found in a ‘meaningful’ quantity.” Deft's Br. at 48. That court stated:

In determining the valuation of the factors of production, the critical question is whether the methodology used by Commerce is based on the best available information and establishes antidumping margins as accurately as possible. Commerce argues that the actual price paid for inputs imported from a market economy in meaningful quantities is the best available information and promotes accuracy in the dumping calculation. Commerce notes that the value of the factors of production for domestically purchased merchandise may be obtained by extrapolating the market economy import price only when a “meaningful” amount of merchandise is imported. Although we recognize that the level of a “meaningful” amount of imported merchandise must be determined on a case-by-case basis, we are persuaded that the steel imported from the United Kingdom in this case constitutes a “meaningful” amount. The steel imported from the United Kingdom constitutes approximately one-third of all steel used....

Shakeproof, 268 F.3d at 1382. In Shakeproof, Commerce argued that the ME data was more accurate that the surrogate data. Id. The Shakeproof court agreed.

[W]here we can determine that a [non-market economy] producer's input prices are market determined, accuracy, fairness, and predictability are enhanced by using those prices. Therefore, using surrogate values when market-based values are available would, in fact, be contrary to the intent of the law.

Shakeproof, 268 F.3d at 1382,quoting Lasko Metal Products, Inc. v. United States, 43 F.3d 1442, 1446 (Fed.Cir.1994). The court finds the reasons why Commerce sought to use the ME data in Shakeproof compellingly favor APP–China's position in this case.

The Oxford English Dictionary defines “meaningful” (as applied to data or its presentation), as “accurate and realistic; of practical use.” ² Commerce's policy, delineated following the Shakeproof decision, defines 33% as a “meaningful” and “significant” amount. The court cannot understand why, in Commerce's view, purchases of 33% of an input are “meaningful”, but purchases of 32.9% are not. There is no meaningful distinction for purposes of determining Normal Value between those two quantities. Commerce itself has said that the 33% rule was not a “rigid, ‘bright line’ threshold”. Antidumping Methodologies: Market Economy Inputs, 71 Fed.Reg. at 61718.

The court finds that Commerce's refusal to value the classes of inputs using the ME price paid for 32.9% of those inputs, where it would have done so if APP–China had made ME purchases of 33% of the input, is unreasonable, arbitrary and capricious under the circumstances. This issue...