U.S. Magnesium LLC v. United States
| Decision Date | 22 January 2013 |
| Docket Number | Slip Op. 13–9.,Court No.: 12–00006. |
| Citation | 895 F.Supp.2d 1319 |
| Parties | US MAGNESIUM LLC, Plaintiff, v. UNITED STATES, Defendant, and Tianjin Magnesium International Co., Ltd., Defendant–Intervenor. |
| Court | U.S. Court of International Trade |
OPINION TEXT STARTS HERE
King & Spalding LLP, (Stephen A. Jones and Jeffery B. Denning), Washington,DC, for U.S. Magnesium LLC, Plaintiff.
Stuart F. Delery, Acting Assistant Attorney General; Jeanne E. Davidson, Director, Claudia Burke, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Renee Gerber and Ryan M. Majerus); Office of the Chief Counsel for Import Administration, United States Department of Commerce, Melissa M. Brewer, Of Counsel, for the United States, Defendant.
Riggle & Craven, (David A. Riggle, Chicago, IL, Saichang Xu, and David J. Craven, Chicago, IL) for Tianjin Magnesium International Co., Ltd., Defendant–Intervenor.
Plaintiff U.S. Magnesium LLC (“USM”) moves for judgment on the agency record challenging the determination by the Department of Commerce, International Trade Administration (“Commerce”) in Pure Magnesium From the People's Republic of China: Final Results of the 2009–2010 Antidumping Duty Administrative Review of the Antidumping Duty Order, 76 Fed. Reg. 76,945 (Dec. 9, 2011) I.A. Access Public Rec. 31 (“ Final Results ”).1 Commerce and defendant-intervenor Tianjin Magnesium International Co., Ltd. (“TMI”) oppose USM's motion.
The administrative review at issue concerns pure magnesium TMI imported from the People's Republic of China (“PRC”) during the period of review (“POR”) beginning May 1, 2009 and ending April 30, 2010. See id. at 76,945. TMI imports pure magnesium supplied by a sole producer, [[ Confidential Data Deleted ]]. P.R. 13 at 11. [[ Confidential Data Deleted ]] produces pure magnesium via the “Pidgeon” process. Under the “Pidgeon” process, the producer first treats magnesium-bearing dolomite in a kiln to produce calcined dolomite. The producer then mixes the calcined dolomite with ferrosilicon and fluorite power and presses the mixture into balls or briquettes. In order to purify the magnesium—chemically and physically separate it from the other inputs—the producer places the pressed mixture into retorts, which are “steel tubes placed under a vacuum in a furnace.” Def.'s Opp. Pl.'s Mot. J. Agency R. at 5 (“Def.'s Br.”). The high heat from the furnace vaporizes the magnesium, which travels through the retort and then “condense[s] into a highly purified form.” Id. at 5; See Pure Magnesium from the PRC: Issues and Decision Memorandum for the Final Results of the 2009–2010 Administrative Review at 7 n. 39, Inv. No. A–570–832 (Dec. 5, 2011) (“ I & D Memo ”). TMI reported that [[ Confidential Data Deleted ]] rented retorts during the POR. See P.R. 45 at 7.
TMI also reported that Mr. James Gammons performed certain “ministerial activities” in the U.S. on behalf of TMI. P.R. 61 at 3. The “activities” focused on [[ Confidential Data Deleted ]].” Id. TMI claimed that “Mr. Gammons was not a sales agent for TMI” and that he did not take possession of subject merchandise in the U.S. prior to sales to U.S. customers. Id.
During the review, Commerce used its nonmarket economy 2 (“NME”) methodology to construct the normal value 3 (“NV”), Pure Magnesium from the PRC: Preliminary Results of the 2009–2010 Antidumping Duty Administrative Review, 76 Fed. Reg. 33,194, 33,195 (June 8, 2011) (“ Preliminary Results ”), using surrogate data to value the factors of production (“FOP”). See19 U.S.C. § 1677b(c)(1). Commerce selected India as the surrogate country and used Indian data to value TMI's FOP. Preliminary Results, 76 Fed. Reg. at 33,195. Commerce classified retorts as an indirect material rather than as a direct material, treating them as factory overhead in the FOP calculation. P.R. 64 at 9. Additionally, Commerce determined that “the subject merchandise was sold directly to the unaffiliated customers in the [U.S.] prior to importation.” Preliminary Results, 76 Fed. Reg. at 33,196. Therefore, Commerce concluded that all of TMI's U.S. sales were export price 4 (“EP”) sales and did not calculate a separate constructed export price (“CEP”) 5 for TMI's U.S. sales. Id. Commerce did not adjust EP to reflect the expenses TMI incurred in association with services Mr. James Gammons provided for TMI in the U.S. See I & D Memo at 3. On June 30, 2010 Commerce issued the preliminary results of the review, assigning TMI a weighted average dumping margin of 0.00%. Preliminary Results, 76 Fed. Reg. at 33,200.
On September 1, 2011, nearly eleven months after the October 19, 2010 deadline for the submission of new factual information, USM submitted a Chinese magnesium industry bulletin which allegedly indicated that [[ Confidential Data Deleted ]] produced retorts during the POR rather than rented them, as TMI reported. See I.A.P.R. 11 at 2. Commerce rejected USM's submission, concluding that “some of the documents submitted by [USM] were clearly available prior to the deadline for submission of factual information.” Id.
On December 9, 2011 Commerce issued the Final Results. See Final Results, 76 Fed. Reg. at 76,945. Although Commerce made certain changes to the margin calculation, it again assigned TMI a weighted average dumping margin of 0.00%. Id. at 76,947.
This Court has jurisdiction over this matter pursuant to 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c).
This Court will uphold Commerce's determination unless it is “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). “Substantial evidence is ‘such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’ ” Huaiyin Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374 (Fed.Cir.2003) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)).
USM argues that the Final Results are unsupported by substantial evidence and are otherwise not in accord with the law with respect to: Commerce's classification of retorts as an indirect material; the surrogate values used to calculate financial ratios, labor rates, and truck freight rates; and Commerce's refusal to adjust the U.S. price to reflect movement expenses associated with services Mr. James Gammons provided for TMI. See Pl.'s Br. Supp. Mot. J. Agency R. at 2–5 (“Pl.'s Br.”). Additionally, USM argues that Commerce abused its discretion by rejecting USM's untimely submission. Id. at 1–2. Commerce asks for voluntary remand in order to reconsider the surrogate values for labor and financial ratios, but opposes USM's motion in all other respects. See Def.'s Br. at 1–2.
During the review, TMI reported that [[ Confidential Data Deleted ]] rented the retorts it used in the production of pure magnesium during the POR and that rental equipment was not treated as a direct expense for accounting purposes in the PRC. See P.R. 45 at 7. Commerce classified retorts as an indirect material in the preliminary results of the review. P.R. 64 at 9. USM challenged that determination before Commerce, P.R. 79 at 5–23, and on September 1, 2011, submitted a newly-discovered Chinese magnesium industry bulletin which allegedly indicated that [[ Confidential Data Deleted ]] produced retorts during the POR. See I.A.P.R. 11 at 2. USM also submitted two pieces of corroborating evidence, a 2006 magnesium industry directory and a website USM alleges belongs to [[ Confidential Data Deleted ]]. Id. Although USM made the submission almost eleven months after the deadline for submission of new factual information, it insisted that Commerce place the submission on the record because it allegedly demonstrated that TMI deliberately misled Commerce by reporting that [[ Confidential Data Deleted ]] rented retorts. Id. Commerce rejected USM's submission because the website and the 2006 directory were “clearly available prior to the deadline for submission of factual information.” Id. Commerce continued to classify retorts as an indirect material in the Final Results. See I & D Memo at 6–9. USM argues that Commerce abused its discretion because it failed to address prima facie evidence of fraud contained in the untimely submission.6See Pl.'s Br. at 14–16.
Commerce has the discretion to establish and enforce deadlines for the submission of factual information. See Grobest, 36 CIT at ––––, 815 F.Supp.2d at 1365 (citing NTN Bearing Corp. v. United States, 74 F.3d 1204, 1206–07 (Fed.Cir.1995)). Commerce may extend such deadlines where it finds that there is “good cause” to do so. 19 C.F.R. § 351.302(b) (2012). However, “Commerce's discretion in this regard is not absolute.” Grobest, 36 CIT at ––––, 815 F.Supp.2d at 1365 (citing NTN Bearing, 74 F.3d at 1207). In determining whether Commerce's rejection of an untimely submission amounts to an abuse of discretion, this Court considers “whether the interests of accuracy and fairness outweigh the burden placed on [Commerce] and the interest in finality.” Id.
Here, the court finds that Commerce abused its discretion because it failed to address prima facie evidence of fraud USM raised while the record was still open. Courts have clearly indicated that prima facie evidence of fraud is to be treated differently than other untimely submitted factual information, allowing and even ordering consideration of such evidence after the closure of administrative proceedings. See Home Prods. Int'l, Inc. v. United States, 633 F.3d 1369, 1381 (Fed.Cir.2011) (); Tokyo Kikai Seisakusho, Ltd. v. United States, 529 F.3d 1352, 1361 (Fed.Cir.2008) (...
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