Suzano S.A. v. United States
| Docket Number | Slip Op. 23-56,Court No. 21-00069 |
| Decision Date | 20 April 2023 |
| Citation | 633 F.Supp.3d 1232 |
| Parties | SUZANO S.A., (Formerly Known as Suzano Papel E Celulose S.A.), Plaintiff, v. UNITED STATES, Defendant, and Domtar Corporation, Defendant-Intervenor. |
| Court | U.S. Court of International Trade |
Craig A. Lewis, Nicholas W. Laneville, and Cayla D. Ebert, Hogan Lovells US LLP, of Washington, D.C., for Plaintiff Suzano S.A.
Antonia R. Soares, Senior 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, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, Tara K. Hogan, Assistant Director. Of counsel on the brief was Benjamin Juvelier, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.
Daniel L. Schneiderman, and Stephen J. Orava, King & Spalding, LLP, of Washington, D.C., for Defendant-Intervenor Domtar Corporation.
The court is asked to revisit a challenge to Commerce's calculation of cost of production. Plaintiff Suzano S.A. (formerly known as Suzano Papel e Celulose S.A.) ("Suzano"), brought this action against Defendant United States ("the Government") to challenge the Department of Commerce's ("Commerce") final determination in the 2018-2019 administrative review of the antidumping duty order on uncoated paper from Brazil. See Certain Uncoated Paper From Brazil: Final Results of Antidumping Duty Administrative Review; 2018-2019, 86 Fed. Reg. 7,254 (Dep't Com. Jan. 27, 2021) ("Final Results"). Suzano argued that Commerce erred by failing to exclude certain of its derivative trading expenses from the cost of production calculation as both (1) investment-related and (2) extraordinary. The court remanded, concluding that Commerce's decision to include the expenses in Suzano's cost of production was unsupported by substantial evidence on both counts. Suzano S.A. v. United States, 46 CIT —, —, 589 F. Supp. 3d 1225, 1228 (2022) ("Suzano I").
On remand, Commerce continues to determine that the derivative trading expenses should be included in the cost of production, as the expenses were neither investment-related nor extraordinary. See Final Results of Redetermination Pursuant to Ct. Remand, Nov. 14, 2022, ECF No. 60-1 ("Remand Results"). Suzano challenges the Remand Results on the basis that (1) record evidence clearly demonstrates a tie between the derivative losses with the acquisition of Fibria, an "investment-related" activity; and (2) the record evidence shows that the derivate losses are extraordinary expenses. Pl.'s Cmts. in Opp. to U.S. Dep't of Com.'s Final Results of Redeter. Pursuant to Ct. Remand, Dec. 14, 2022, ECF No. 62 ("Pl.'s Br."). The Government requests the court sustain the remand results, Def.'s Reply in Supp. of Dep't of Com.'s Remand Redeter., Jan. 13, 2023, ECF No. 64 ("Def.'s Br."), as does Defendant-Intervenor Domtar Corporation ("Domtar"), Def.-Inter.'s Resp. in Supp. of Com.'s Remand Redeter., Jan 10, 2023, ECF No. 63 ("Def.-Inter.'s Br.").
For the reasons set forth below, the court concludes that Commerce's determinations on investment-related costs are supported by substantial evidence and further is in accordance with law and the court's remand instructions. The court concludes, however, that Commerce's determination on extraordinary expenses is unsupported by substantial evidence. The court therefore sustains the Remand Results in part and remands in part for further explanation.
The court described in detail the factual and legal background of this case in Suzano I. Only the details relevant to the current disposition are provided below.
In calculating a product's normal value, Commerce may choose to disregard sales made at less than the cost of production ("COP"). 19 U.S.C. § 1677b(a)(1)(B)(i). COP is equal to the sum of (1) the cost of "materials and . . . fabrication or other processing," (2) "selling, general, and administrative expenses," and (3) "the cost of all containers and coverings" required for sale and shipment. 19 U.S.C. § 1677b(b)(3)(A)-(C). Costs, including COP, are normally calculated based on records kept in accordance with the generally accepted accounting principles of the exporting country. 19 U.S.C. § 1677b(f)(1)(A). Commerce "shall consider all available evidence on the proper allocation of costs, including that which is made available by the exporter or producer on a timely basis, if such allocations have been historically used by the exporter or producer . . . ." Id. (emphasis added).
In administering the statute, Commerce has generally excluded both "investment-related" and "extraordinary" expenses from COP. AG der Dillinger Hüttenwerke v. United States, 45 CIT —, —, 532 F. Supp. 3d 1338, 1344 (2021) (); see also Hornos Electricos de Venez. v. United States, 27 CIT 1522, 1534, 285 F. Supp. 2d 1353, 1365 (2003) () (quoting Floral Trade Council v. United States, 16 CIT 1014, 1016, 1992 WL 406592 (1992)).
Legislative history indicates that the purpose of enacting 19 U.S.C. § 1677b(f) was to "harmonize[ ] the methods of calculating cost for purposes of examining sales below cost and determining constructed value." Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103-316, at 840 (1994), as reprinted in 1994 U.S.C.C.A.N. 4040, 4171 ("SAA").1 Thus, the statute intends that:
Costs shall be allocated using a method that reasonably reflects and accurately captures all of the actual costs incurred in producing and selling the product under investigation or review. In determining whether to accept the cost allocation methods proposed by a specific producer, Commerce will consider the production cost information available to the producer and whether such information could reasonably be used to compute a representative measure of the materials, labor and other costs, including financing costs, incurred to produce the subject merchandise, or the foreign like product. Commerce also will consider whether the producer historically used its submitted cost allocation methods to compute the cost of the subject merchandise prior to the investigation or review and in the normal course of its business operation.
Id. at 4172 (emphasis added).
On February 24, 2021, Suzano initiated this appeal to contest Commerce's Final Results. Summons, ECF No. 1; Compl., Mar. 2, 2021, ECF No. 9. The central issue was whether Commerce's categorization of certain of Suzano's expenses as financial costs was supported by substantial evidence. Suzano I, 589 F. Supp. 3d at 1228. Following briefing and oral argument, the court remanded on August 16, 2022, for further explanation by Commerce regarding its inclusion of Suzano's derivative expenses in the COP calculation. See generally id.
On remand, Commerce released its draft results continuing to find that the expenses were neither investment-related nor extraordinary. See Draft Results of Redeter. Pursuant to Ct. Remand (Dep't Com. Oct. 13, 2022), P.R.R. 1 ("Draft Remand Results").2 After receiving written comments from the parties, Commerce issued the Remand Results reiterating its reasoning that the expenses were neither investment-related nor extraordinary, and thus that the expenses would be included in the COP. Remand Results at 17. The matter is now before the court as the parties have filed their comments to the Remand Results. USCIT R. 56.2(h).
The court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c). The court sustains Commerce's determinations, findings, and conclusions on remand unless they are unsupported by substantial evidence, or otherwise not in accordance with law. SeAH Steel VINA Corp. v. United States, 950 F.3d 833, 840 (Fed. Cir. 2020); 19 U.S.C. § 1516a(b)(1)(B). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951); Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938). In conducting its review, the court's function is not to reweigh the evidence but rather to ascertain whether Commerce's determinations are supported by substantial evidence on the record. Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 936 (Fed. Cir. 1984); see also DAK Ams. LLC v. United States, 45 CIT —, —, 517 F. Supp. 3d 1349, 1362 (2021).
Suzano challenges Commerce's continued treatment of the derivative expenses as neither investment-related nor extraordinary. Pl.'s Br. at 6-18. As noted, Suzano again raises two issues: (I) whether Commerce concluded by substantial evidence that the derivative expenses were not investment-related; and (II) whether Commerce concluded by substantial evidence that the derivative expenses were not "extraordinary." See id. Upon review, the court sustains the Remand Results in part and remands in part.
In its original opinion, the court concluded that "Commerce failed to adequately consider Suzano's unaudited quarterly reports," and thus its determination that the derivative losses were not investment-related "is unsupported by substantial evidence." Suzano I, 589 F. Supp. 3d at 1234. Specifically, the court pointed to the portion of the quarterly reports separating the expenses...
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