Psc Vsmpo-Avisma Corp. v. United States

Slip Op. 11-25

UNITED STATES COURT OF INTERNATIONAL TRADE

_____________________________________
:
PSC VSMPO-AVISMA Corporation :
and VSMPO-Tirus, U.S., Inc., :
:
Plaintiffs, :
v. : Before: Jane A. Restani, Judge
:
UNITED STATES, : Court No. 09-00349
:
Defendant : Public Version
:
and :
:
US Magnesium LLC :
:
Intervenor Defendant :
_________________________________________ :

OPINION AND ORDER

[Remand to Department of Commerce to reconsider AFA rate.]

Dated: March 7, 2011

Arent Fox LLP (John M. Gurley, Mark P. Lunn, and Diana Dimitriuc-Quaia) for
the plaintiffs.

Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, Patricia M.
McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department
of Justice (David S. Silverbrand); Office of Chief Counsel for Import Administration, U.S.
Department of Commerce (Daniel J. Calhoun), of counsel, for the defendant.

King & Spalding, LLP (Stephen A. Jones, Jeffrey B. Denning, Jeffrey M. Telep,
and Steven R. Keener) for the intervenor-defendant.

Restani, Judge: This court action challenges the Department of Commerce’s

(“Commerce”) final results rendered in an antidumping duty review of magnesium metal from
Court No. 09-00349 Page 2

Russian Federation (“Russia”). See Magnesium Metal From the Russian Federation: Final

Results and Partial Rescission of Antidumping Duty Administrative Review, 74 Fed. Reg.

39,919 (Dep’t Commerce Aug. 10, 2000). The plaintiffs, PSC VSMPO-AVISMA Corporation

and VSMPO-Tirus, U.S., Inc. (collectively “AVISMA”), submitted a motion for judgment on the

agency record pursuant to USCIT Rule 56. For the reasons stated below, the court denies the

plaintiffs’ motion in part and remands to Commerce so that it may reconsider the AFA rate.

BACKGROUND

In February 2004, multiple U.S. companies, representing the domestic producers

of magnesium metal (“the domestic industry”),1 filed a petition with Commerce concerning

magnesium metal from Russia and the People’s Republic of China. Initiation, 69 Fed. Reg. at

15,293. In March 2004, Commerce initiated an antidumping investigation of magnesium metal

from Russia for the period of January 1, 2003 through December 31, 2003, id. at 15,295, and

selected AVISMA and Solikamsk Magnesium Works (“SMW”) as the mandatory respondents,

Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final

Determination: Magnesium Metal From the Russian Federation, 69 Fed. Reg. 59,197, 59,198

(Dep’t Commerce Oct. 4, 2004). In March 2005, Commerce determined that AVISMA and

SMW, during the period of investigation, sold the subject merchandise in the United States with

1
The “ad hoc coalition” consisted of U.S. Magnesium Corporation LLC (“U.S.
Magnesium”), United Steelworkers of America, Local 8319, and Glass, Molders, Pottery,
Plastics & Allied Workers International, Local 374. Notice of Initiation of Antidumping Duty
Investigations: Magnesium Metal From the People’s Republic of China and the Russian
Federation, 69 Fed. Reg. 15,293, 15,293 (Dep’t Commerce Mar. 25, 2004) (“Initiation”).
Court No. 09-00349 Page 3

antidumping duty (AD) margins of 21.71% and 18.65% respectively.2 Magnesium Metal From

the Russian Federation: Notice of Amended Final Determination of Sales at Less Than Fair

Value, 70 Fed. Reg. 15,837, 15,837 (Dep’t Commerce Mar. 29, 2005).

In September 2007, Commerce completed an administrative review of this order

for the period of October 4, 2004, through March 31, 2006, and calculated AD margins of .41%

(de minimis) for AVISMA and 3.77% for SMW. Magnesium Metal from the Russian Federal:

Final Results of Antidumping Duty Administrative Review, 72 Fed. Reg. 51,791, 51,792 (Dep’t

Commerce Sept. 11, 2007). In September 2008, Commerce published the results of the

administrative review (“2006/07 review”) for the period of April 1, 2006, through March 31,

2007, and calculated an AD margin of 15.77% for AVISMA. Magnesium Metal from the

Russian Federation: Final Results of Antidumping Duty Administrative Review, 73 Fed. Reg.

52,642, 52,643 (Dep’t Commerce Sept. 10, 2008) (“Final Results 2008”). Commerce, however,

selected an adverse facts available (“AFA”) rate of 21.71% for SMW.3 Id.

In June 2008, Commerce initiated the administrative review (“2007/08 review”)

of the AD duty order regarding magnesium metal from Russia for the period of April 1, 2007,

2
An AD margin is the difference between the normal value (“NV”) of merchandise and
the price for sale in the United States. See 19 U.S.C. § 1673e(a)(1); 19 U.S.C. § 1677(35).
Unless nonmarket economy (“NME”) methodology is used, an NV is either the price of the
merchandise when sold for consumption in the exporting country or the price of the merchandise
when sold for consumption in a similar country. 19 U.S.C. § 1677b(a)(1). An export price or
constructed export price is the price that the merchandise is sold for in the United States. 19
U.S.C. § 1677a(a)–(b).
3
Shortly after the initiation of the second review, SMW notified Commerce that it would
not participate. Magnesium Metal from the Russian Federation: Preliminary Results of
Antidumping Duty Administrative Review, 73 Fed. Reg. 24,541, 24,542 (Dep’t Commerce May
5, 2008).
Court No. 09-00349 Page 4

through March 31, 2008. Initiation of Antidumping and Countervailing Duty Administrative

Reviews and Requests for Revocation in Part, 73 Fed. Reg. 31,813, 31,813 (Dep’t Commerce

June 4, 2008). In January 2009, however, AVISMA informed Commerce that it would no longer

participate in the administrative review because of “the administrative burdens required to pursue

this review further, including multiple verifications of AVISMA and VSMPO-Tirus, a change in

AVISMA’s product focus, as well as other matters affecting the respondents’ business.” Pls.’

Confidential App. Tab 2, 1. In April 2009, Commerce published the preliminary results of its

review and assigned AVISMA an AFA rate of 43.58%, “the highest transaction-specific rate [it]

calculated in the 2006/07 administrative review of the order with respect to AVISMA.”

Magnesium Metal From the Russian Federation: Preliminary Results of Antidumping Duty

Administrative Review and Intent To Rescind in Part, 74 Fed. Reg. 15,435, 15,437 (Dep’t

Commerce Apr. 6, 2009). In response to this AFA rate, AVISMA submitted a case brief urging

Commerce to select the lower rate of 21.71%, the highest weighted-average margin from the

original AD investigation. Pls.’ Confidential App. Tab 11, 29–34. Nevertheless, Commerce

published its final results in August 2009, and selected an AFA rate of 43.58% for AVISMA.

Magnesium Metal From the Russian Federation: Final Results and Partial Rescission of

Antidumping Duty Administrative Review, 74 Fed. Reg. 39,919, 39,920 (Dep’t Commerce Aug.

10, 2009) (“Final Results”).

In August 2009, the plaintiffs commenced this action contesting the AFA rate of

43.58%. In March 2010, the plaintiffs filed a motion for judgment on the agency record pursuant

to USCIT Rule 56.2.
Court No. 09-00349 Page 5

STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court will uphold

Commerce’s final results in AD reviews unless they are “unsupported by substantial evidence on

the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

I. 19 U.S.C. § 1677e

During an AD review, when “an interested party has failed to cooperate by not

acting to the best of its ability to comply with a request for information from the administering

authority . . . the administering authority . . . may use an inference that is adverse to the interests

of that party in selecting from among the facts otherwise available.” 19 U.S.C. § 1677e(b). The

AD duty rate under such circumstances is known as an AFA rate and may be based on

information obtained from: “(1) the petition, (2) a final determination in the investigation under

this title, (3) any previous review under . . . [19 U.S.C. § 1675] or determination under . . . [19

U.S.C. § 1675b], or (4) any other information placed on the record.” Id. For this reason, the

United States Court of Appeals for the Federal Circuit has repeatedly acknowledged that

“Commerce’s discretion in applying an AFA margin is particularly great.” PAM S.p.A. v.

United States, 582 F.3d 1336, 1340 (Fed. Cir. 2009).

A. AVISMA’s AFA Rate is Uncorroborated

AVISMA challenges the Final Results on the grounds that the selected AFA rate

of 43.58% violates 19 U.S.C. § 1677e(c) because it is not corroborated. Pls. PSC VSMPO-

AVISMA Corporation and VSMPO-TIRUS, US Inc.’s Mem. Law Supp. Mot. J. on the Agency
Court No. 09-00349 Page 6

R. Pursuant to Rule 56.2 (“Pls.’ Br.”) 8, 17. This claim has merit.

Although “the possibility of a high AFA margin creates a powerful incentive to

avoid dumping and to cooperate in investigations, there is a limit to Commerce's discretion.”

PAM S.p.A., 582 F.3d at 1340. Pursuant to 19 U.S.C. § 1677e(c), “[w]hen the administering

authority . . . relies on secondary information rather than on information obtained in the course of

an investigation or review, the administering authority . . . shall, to the extent practicable,

corroborate that information from independent sources that are reasonably at their disposal.” 19

U.S.C. § 1677e(c). “Secondary information includes [i]nformation derived from the petition that

gave rise to the investigation or review, the final determination concerning the subject

merchandise, or any previous review under [19 U.S.C. § 1675] concerning the subject

merchandise.” KYD, Inc. v. United States, 607 F.3d 760, 765 (Fed. Cir. 2010) (internal

quotation marks and citation omitted). Here, the AFA rate of 43.58% was based on the highest

transaction-specific margin calculated for AVISMA during the previous administrative review,

and thus, is secondary information. Commerce must, therefore, corroborate this information “to

the extent practicable.” 19 U.S.C. § 1677e(c); see also Gallant Ocean (Thai.) Co., Ltd. v. United

States, 602 F.3d 1319, 1324 (Fed. Cir. 2010).

In order to corroborate an AFA rate, Commerce must show that it used “reliable

facts” that had “some grounding in commercial reality.” Gallant, 602 F.3d a 1324. Here,

Commerce reasoned that the AFA rate of 43.58% was relevant and reliable and therefore,

“corroborated to the extent practicable,” as a result of it being “based on AVISMA’s

questionnaire responses and accompanying data from the immediately preceding administrative
Court No. 09-00349 Page 7

review that are uncontradicted by any record evidence.” Issues and Decision Memorandum for

the Antidumping Duty Administrative Review of Magnesium Metal from the Russian Federation

for the Period of Review April 1, 2007, through March 31, 2008, A-821-819, at 14 (Aug. 10,

2009) (“Issues and Decision Memorandum”), available at Pls.’ Confidential App. Tab 8.

Commerce’s apparent understanding of reliability, however, is misplaced. The mere fact that

specific-transaction data is accurate and verified does not ipso facto render it reliable for these

purposes.4 See PAM, S.p.A., 582 F.3d at 1340 (providing that “one sale by itself” will not

“always rise to the level of substantial evidence”); JTEKT Corp. v. United States, 675 F. Supp.

2d 1205, 1256 (CIT 2009); Ferro Union, Inc. v. United States, 44 F. Supp. 2d 1310, 1334 (CIT

1999).5 Rather, reliability in this context is determined by the information’s relationship to the

commercial reality of this respondent. See Gallant, 602 F.3d at 1323–24. Thus, otherwise

uncontradicted information from prior reviews can be proven ungrounded in commercial reality

4
U.S. Magnesium relies heavily on Ta Chen Stainless Steel Pipe, Inc. v. United States,
298 F.3d 1330 (Fed. Cir. 2002), for the proposition that a single sale from a prior review can
render an AFA rate corroborated. See US Magnesium’s Resp. in Opp’n Pls.’ Rule 56.2 Mot. for
J. on the Agency R. 26–27. The Federal Circuit recently explained, however, that despite
language in the opinion to the contrary, “Ta Chen was not a corroboration case as Commerce
relied on primary information.” Gallant, 602 F.3d at 1324. Commerce, therefore, did not need to
establish specifically how the one actual sale in that case corroborated the selected rate. For this
reason, Ta Chen is distinguishable from this case because the single sale data used here is from a
prior review and thus, must be corroborated. See Final Results, 74 Fed. Reg. at 39,920; Ta Chen,
298 F.3d at 1339. In any case, however, substantial evidence has to support the choice of rate.
5
Although both of the last two cases involved margins that were far more out of date than
the one at hand, JTEKT Corp., 675 F. Supp. 2d at 1256 (margin calculated seventeen years
earlier) Ferro Union, Inc., 44 F. Supp. 2d at 1335 (margin calculated eight years earlier), there is
no reason to assume their holdings are limited to those circumstances, as the Government
suggests, Def.’s Resp. Pls.’ Rule 56.2 Mot. J. Upon Agency R. 17. Commerce cannot “proceed[]
on the basis that prior calculated margins are ipso facto reliable,” as it did in this case. Ferro
Union, Inc., 44 F. Supp. 2d at 1334. Rather, it must do more to show relevancy and reliability.
Court No. 09-00349 Page 8

if “much more reliable information,” such as a large quantity of more recent data suggesting

different market conditions, is present. Id. at 1323.

Commerce, therefore, has failed to explain its reasoning adequately or has failed

to corroborate adequately AVISMA’s AFA rate because it has not related it to market realities.6

See Gallant, 602 F.3d at 1325 (holding that an AFA rate is uncorroborated when “Commerce . . .

did not show that a small percentage of the mandatory respondents’ transactions represented a

reasonably accurate estimate of [the plaintiff’s] actual dumping margin”).7 Accordingly, the

court remands this matter to Commerce with instructions to either reasonably explain such a

relationship, thereby corroborating the 43.58% AFA rate, or replace it with a rate that is

corroborated.8 See Gallant, 602 F.3d at 1324; Taifa, 2010 Ct. Int’l Trade LEXIS 131, at *18–19.

B. AVISMA’s AFA Rate Has Not Been Demonstrated to Be Punitive

6
While the fact that this rate was calculated from single sale data from the previous
administrative review may be some evidence, Commerce must explain what relevance this rate
has to current commercial reality. See Pls.’ Reply to Def.’s and Def.-Intervenor’s Resps. in
Opp’n to Pls.’ Mot. for J. on the Agency R. 11.
7
The court has noted that a rate based on specific transactions is generally not as
acceptable as an overall rate calculated for a party. See Qingdao Taifa Grp. Co., Ltd. v. United
States, Slip Op. 10-126, 2010 Ct. Int’l Trade LEXIS 131, *17–18 (CIT Nov. 12, 2010); see also
infra Sect. II.
8
It remains unclear whether or not Commerce can explain or corroborate this percentage
given the facts of this case. The AFA rate calculated was using the data of one sale from a prior
investigation that is significantly higher than the next three highest transaction specific rates from
that review ([[ ]]%, [[ ]]%, and [[ ]]%). See Pls.’ Br. 24. Even in PAM,
S.p.A., Commerce corroborated the AFA rate by a percentage, albeit small, of prior sales. 582
F.3d at 1340. If Commerce were to adopt a similar methodology in this case, AVISMA’s AFA
rate would be much lower than it is now. See Pls.’ Br. 24.

Confidential Data Deleted
Court No. 09-00349 Page 9

Next, AVISMA argues that the AFA rate was punitive because, inter alia,9

Commerce assigned SMW, another uncooperative Russian respondent, an AFA rate of 21.71%

in the prior review. See Pls.’ Br. 32–38. This argument lacks merit.

“[T]he purpose of section 1677e(b) is to provide respondents with an incentive to

cooperate, not to impose punitive, aberrational, or uncorroborated margins.” F.Lii De Cecco Di

Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000). An AFA

rate is punitive if it is not “based on facts” and “has been discredited by the agency’s own

investigation.” Id., at 1033 (internal quotation marks omitted). At this point there is little

evidence establishing whether the rate is punitive or not. If the rate is sufficiently corroborated as

a reliable rate it will not be found to be punitive.

C. AVISMA’s AFA Rate Has Not Been Demonstrated to Be Aberrational

Additionally, AVISMA argues that its AFA rate is impermissibly aberrational

because it is based on an outlier sale. Pls.’ Br. 25–32. Specifically, AVISMA argues that this

single sale had an unusually low quantity, and unusually high freight expenses. See id. This

argument lacks merit.

During its review, AVISMA raised its concerns about the representational value

of this sale and Commerce investigated, but concluded that these allegedly abnormal factors were

not correlated to a higher margin. Administrative Review of the Antidumping Duty Order on

9
AVISMA’s contentions on several of these issues are repetitive at times. See Pl.’s Br.
17–38. This is because one of AVISMA’s claims, that Commerce’s decision was not supported
by substantial evidence because this transaction-specific margin was so large compared to all
others if successful, would render this AFA rate uncorroborated, aberrational, or punitive, or all
three.
Court No. 09-00349 Page 10

Magnesium Metal from the Russian Federation - Final Results Analysis Memorandum for PSC

VSMPO-AVISMA Corporation, 2, available at Pls.’ Confidential App. Tab 15. Thus,

Commerce demonstrated that high freight expenses or low quantities did not cause this sale’s

higher transaction-specific margin. See id. With the exception of the fact that this sale has the

highest transaction-specific margin by a wide margin from the previous review,10 there is no

evidence on the record that demonstrates how this sale was irregular. At this time there does not

appear to be substantial evidence on this issue, either way.

II. Commerce’s Methodology

Finally, AVISMA claims that Commerce’s decision to base the AFA rate on a

transaction-specific margin is unreasonable in light of Commerce’s general practice of adopting

the highest weighted-average margin calculated for any respondent in any previous segment of

the proceeding. Pls.’ Br. 10–12. This claim has merit.

Generally, statutory silence has been interpreted as “an invitation” for an agency

administering unfair trade law to “perform its duties in the way it believes most suitable” and

courts will uphold these decisions “[s]o long as the [agency]’s analysis does not violate any

statute and is not otherwise arbitrary and capricious.” U.S. Steel Group v. United States, 96 F.3d

1352, 1362 (Fed. Cir. 1996). For this reason, “Commerce has broad discretion in making

antidumping determinations.” Gallant, 602 F.3d at 1323. As previously discussed, this

“discretion is particularly great in the case of uncooperative respondents.” Id.

10
This fact, in and of itself, does not automatically render the rate aberrational. See
Branco Peres Citrus, S.A. v. United States, 173 F. Supp. 2d 1363, 1376 (CIT 2001) (holding that
an AFA rate based on a transaction-specific margin was supported by substantial evidence).
Court No. 09-00349 Page 11

When selecting an AFA rate in an administrative review, Commerce has utilized

its discretion by seemingly establishing a practice of adopting the highest weighted-average

margin calculated for any respondent during either the original investigation or any subsequent

review. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the

People’s Republic of China: Final Results of Antidumping Duty Administrative Review, 74 Fed.

Reg. 3987, 3989 (Dep’t Commerce Jan. 22, 2009); Final Results 2008, 73 Fed. Reg. at 52,643;

Certain Small Diameter Carbon and Alloy Seamless Standard, Line, and Pressure Pipe from

Romania: Preliminary Results of Antidumping Duty Administrative Review, 71 Fed. Reg. 1509,

1510 (Dep’t Commerce Jan. 10, 2006); Certain Corrosion-Resistant Carbon Steel Flat Products

from the Republic of Korea: Notice of Preliminary Results of Antidumping Duty Review and

Antidumping Duty New Shipper Review, 69 Fed. Reg. 54,101, 54,104–05 (Dep’t Commerce

Sept. 7, 2004); Notice of Final Results and Partial Recision of Antidumping Duty Administrative

Review; Oil Country Tubular Goods, Other Than Drill Pipe, from Argentina, 68 Fed. Reg.

39,516, 39,518 (July 2, 2003). This practice has also been upheld in numerous decisions. See

Peer Bearing Co. - Changshan v. United States, 587 F. Supp. 2d. 1319, 1327 (CIT 2008);

Shanghai Taoen Int’l Trading Co. v. United States, 360 F. Supp. 2d 1339, 1346 (CIT 2005);

Allegheny Ludlum Corp. v. United States, 276 F. Supp. 2d. 1344, 1359 (CIT 2003).

Commerce’s decision in this review, to assign an AFA rate based on a highest transaction-

specific rate from its previous review rather than a weighted-average margin, therefore, is

contrary to its normal practice.

At times, however, Commerce has assigned an AFA rate to an uncooperative
Court No. 09-00349 Page 12

respondent based on a transaction-specific margin. See Certain Frozen Warmwater Shrimp from

Ecuador: Preliminary Results and Partial Rescission of Antidumping Duty Administrative

Review, 72 Fed. Reg. 10,698, 10,701 (Dep’t Commerce Mar. 9, 2007); Notice of Final

Determination of Sales at Less Than Fair Value, and Negative Determination of Critical

Circumstances: Certain Lined Paper Products from India, 71 Fed. Reg. 45,012, 45,013 (Dep’t

Commerce Aug. 8, 2006) (“Lined Paper”); Certain Cut-to-Length Carbon-Quality Steel Plate

Products From Italy: Final Results and Partial Rescission of Antidumping Duty Administrative

Review, 71 Fed. Reg. 39,299, 39,302 (Dep’t Commerce July 12, 2006) (“Plate Products”);

Frozen Concentrated Orange Juice From Brazil; Final Results and Partial Rescission of

Antidumping Duty Administrative Review, 64 Fed. Reg. 43,650, 43,651–52 (Dep’t Commerce

Aug. 11, 1999). When departing from a previous practice, an agency “need not demonstrate to a

court’s satisfaction that the reasons for the new policy are better than the reasons for the old one;

it suffices that the new policy is permissible under the statute, that there are good reasons for it,

and that the agency believes it to be better, which the conscious change of course adequately

indicates.” FCC v. Fox Television Stations, Inc., 129 S. Ct. 1800, 1811 (2009). Indeed, in the

aforementioned proceedings where Commerce departed from its normal practice, its decision

was upheld because it either explained that no other “probative alternatives” were available

during an investigation, see Ass’n of Am. Sch. Paper Suppliers v. United States, Slip Op. 08-122,

2008 Ct. Int’l Trade LEXIS 128, at *15–17 (CIT Nov. 17, 2008) (internal quotation marks

omitted), or explained why all previous weighted-average transactions were too low to provide

an incentive to cooperate, see Branco Peres Citrus, S.A. v. United States, 173 F. Supp. 2d 1363,
Court No. 09-00349 Page 13

1376 (2001). Thus, when Commerce departs from its normal practice and bases an AFA rate on

a single-transaction margin, it must explain its decision.

In its Final Results, Commerce determined that 21.71%, the AFA rate assigned to

SMW in the prior review and the highest weighted-average margin in the proceedings, was not

sufficient “[b]ecause AVISMA’s cash-deposit rate was 21.71 percent for entries during a portion

of the 2007/08 POR.” Issues and Decision Memorandum at 12. Commerce seemingly reasoned

that if the cash deposit rate of 21.71% was not sufficiently adverse to cause AVISMA to

cooperate during the period of review, the AFA rate needed to be higher. Id. at 11–12. Although

such reasoning is likely enough to support a rate higher than 21.71%, the statutory language

requires Commerce to corroborate the selected rate to the extent practicable, and as previously

discussed, it has failed to do so here. See supra 5–8.

The fact that the rate of 21.71% was too low to incite AVISMA’s cooperation

does not render the much higher rate of 43.58% corroborated. Rather, the issue is whether the

selected rate of 43.58% “represented a reasonably accurate estimate of [AVISMA’s] actual

dumping margin” and is therefore, corroborated. Gallant, 602 F.3d at 1325. To satisfy this

statutory requirement, Commerce must either demonstrate how 43.58% is a reasonably accurate

estimate of AVISMA’s actual dumping rate (albeit with a deterrence factor built in) beyond the

mere fact that there is one transaction on the record at this margin, or select a new rate that is

better grounded in its commercial reality. See id. at 1323–25.

III. Supplemental Information

On November 24, 2010, AVISMA filed a notice of supplemental authority,
Court No. 09-00349 Page 14

alerting the court, for the first time, to the status of its litigation challenging the findings of the

2006/07 administrative review. Notice of Supplemental Authority, ECF No. 63. In that matter,

AVISMA challenged the legality of Commerce’s method for calculating the value of chlorine gas

for the purposes of determining NV. See PSV VSMPO-AVISMA Corp. and VSMPA Tirus,

U.S., Inc. v. United States, 724 F. Supp. 2d 1308, 1310 (CIT 2010). The court held that the

valuation methodology Commerce used in that review was unsupported by the record and was

contrary to the statute and remanded for further consideration. Id. In accordance with that order,

Commerce filed its Results of Redetermination Pursuant to Remand, in which it reexamined its

calculation methodology for NV and reduced AVISMA’s AD margin for the 2006/07 review

from 15.77% to 8.51%. Results of Redetermination Pursuant to Remand 15, available at Notice

of Supplemental Authority, at Attach. AVISMA attached these remand results to its Notice of

Supplemental Authority.

On November 30, 2010, the court held oral argument at which AVISMA

contended that Commerce now needs to consider its 2006/07 remand determination, effectively

reducing all of the transaction-specific AD margins from that review, when corroborating an

AFA rate in this review. Tr. of Oral Arg. 3:12–24, Nov. 30, 2010. The Government, however,

claimed that AVISMA had failed to exhaust this claim, as it had failed to challenge the

calculation of the 43.58% rate at the administrative level. Id. at 22:12–22. The court ordered the

parties to submit supplemental briefing on this issue. Order, Nov. 30, 2010, ECF No. 64. In its

brief, AVISMA maintained that exhaustion does not apply to this information. Pls. PSC

VSMPO-AVISMA Corp. and VSMPO-Tirus, US Inc.’s Resp. to Def. and Def.-Intervenor’s
Court No. 09-00349 Page 15

Comments on Pls.’ Notice of Supplemental Authority (“Pls.’ Supplemental Br.”) 4. This claim

lacks merit.

The court “shall, where appropriate, require the exhaustion of administrative

remedies.” 28 U.S.C. § 2637(d). “Although the court has discretion to remand an issue to the

agency despite non-exhaustion of remedies . . . the Supreme Court has cautioned that a remand

requires a showing that the failure to raise an issue was not the result of a lack of due diligence

on the part of the claimant.” Bridgestone Ams., Inc. v. United States, 710 F. Supp. 2d 1359,

1366 (CIT 2010) (citations and internal quotation marks omitted).

AVISMA argues that it could not have questioned the 43.58% margin’s veracity

in the 2007/08 review because the allegedly flawed methodologies from the 2006/07 review were

not on the 2007/08 record. Pls.’ Supplemental Br. 5. Furthermore, AVISMA contends that such

a challenge was barred by res judicata.11 Id. at 6–7. This argument is unpersuasive, however, as

the AFA rate of 43.58% from the 2007/08 review is merely a proxy that Commerce selected

using facts otherwise available. See 19 U.S.C. § 1677e(b). AVISMA could have argued during

the 2007/08 review that 43.58% was a flawed proxy per its own challenge of the 2006/07 review,

and sought to incorporate that record, if necessary. Such comment would have afforded

Commerce the option of avoiding any potential problems with the accuracy of the 43.58%

11
AVISMA also argues that this supplemental information does not raise a new issue, but
rather further supports its original claim that the 43.58% transaction-specific rate was unreliable
and uncorroborated. Pls.’ Supplemental Br. 12. If the court were to require the recent
developments concerning the 2006/07 review to be considered, however, all of the transaction-
specific rates could be invalidated, including the smaller margins that AVISMA initially
advanced. See Pls.’ Br. 24–25. This issue, therefore, cannot be considered a mere extension of
AVISMA’s original claim.
Court No. 09-00349 Page 16

calculation by agreeing with AVISMA or choosing another avenue, regardless of whether

Commerce believed its calculation methodology from the 2006/07 review was correct.12 See

Unemployment Comp. Comm’n of Alaska v. Aragon, 329 U.S. 143, 155 (1946) (exhaustion

affords agencies the “opportunity to consider the matter, make its ruling, and state the reasons for

its action”); Aectra Refining and Marketing, Inc. v. United States, 565 F.3d 1364, 1373 (Fed. Cir.

2009) (a respondent must raise its specific claim on the agency level “even if the government

authority to whom the claim is presented is certain to dispute the validity of the claim”). For this

reason, AVISMA failed to exhaust the issue of whether the 2006/07 specific transaction margin

was an adequate basis for an AFA rate here based on the manner of calculation in that review.13

Nonetheless, this matter is remanded for other reasons, and Commerce should arrive at a rate

12
“Exceptions to the exhaustion doctrine may include: (1) raising a pure question of law
that neither creates undue delay nor causes expenditure of scarce party time and resources, . . . (2)
judicial interpretations of existing law after decision below and pending appeal interpretations
which if applied might have materially altered the result, . . . and (3) raising the issue before the
agency would have been futile.” Bridgestone Ams., 710 F. Supp. 2d at 1364 n.4 (citations and
internal quotation marks omitted). None of these exceptions apply, however, as this issue
requires factual decisions, AVISMA was aware of its own challenge of the 2006/07 review, and
it is unclear if Commerce would have used other available facts to reach a corroborated AFA rate
if this reason to do so had been presented.
13
AVISMA claims that the use of incorrect information is contrary to law, as it violates
concepts of fairness, accuracy, and cannot, as a practical matter, represent commercial reality.
Pls.’ Supplemental Br. 14–18. The court notes that this is not a case where the selected rate is
based on another company’s data. Under such circumstances, a respondent may be unaware of
flaws and thus, exhaustion of remedies on the agency level would be impracticable. See Hormel
v. Helvering, 312 U.S. 552, 558–59 (1941). In contrast, when a plaintiff is aware of possible
problems with information from prior reviews, interests of “fairness” and accuracy will not
trump those of judicial economy to excuse what is otherwise a failure to exhaust. See IPSCO,
Inc. v. United States, 749 F. Supp. 1147, 1150 (CIT 1990), aff’d in relevant part, 965 F.2d 1056,
1061–62 (Fed. Cir. 1992) (providing that interests of “[j]udicial economy, fairness to the parties
and the need to fulfill Congress’s intent . . . requires that errors . . . be raised from the outset”).
Court No. 09-00349 Page 17

which is fair and will not needlessly multiply or extend proceedings.14

CONCLUSION

For all the foregoing reasons, the court remands the matter for Commerce to

reconsider the rate selected and explain it or to select another AFA rate based on substantial

evidence. Any rate selected shall be corroborated to the extent practicable.

Commerce shall file its remand determination with the court within 75 days of

this date. AVISMA and US Magnesium have 20 days thereafter to file objections, and the

Government will have 11 days thereafter to file its response.

/s/ Jane A. Restani
Jane A. Restani
Judge

Dated: This 7th day of March, 2011.
New York, New York.

14
Thus, if Commerce now agrees that the specific transaction rate it selected is incorrect,
the court expects it would substitute a different rate.