Slip Op. 07-4
UNITED STATES COURT OF INTERNATIONAL TRADE
:
SHANDONG HUARONG GENERAL :
GROUP CORPORATION and :
LIAONING MACHINERY IMPORT :
& EXPORT CORPORATION, :
: Before: Richard K. Eaton, Judge
Plaintiffs, :
: Court No. 01-00858
v. :
:
UNITED STATES, :
:
Defendant. :
:
MEMORANDUM OPINION
[United States Department of Commerce’s Final Results of
Redetermination Pursuant to Court Remand sustained.]
Dated: January 9, 2007
Hume & Associates, PC (Robert T. Hume), for plaintiffs.
Peter D. Keisler, Assistant Attorney General, Civil Division,
United States Department of Justice; David M. Cohen, Director,
Commercial Litigation Branch, Civil Division, United States
Department of Justice; Jeanne E. Davidson, Deputy Director,
Commercial Litigation Branch, Civil Division, United States
Department of Justice (Stephen C. Tosini); Ada E. Bosque, United
States Department of Commerce Office of Chief Counsel for Import
Administration, of counsel, for defendant.
Eaton, Judge: This matter is before the court following a
third remand to the United States Department of Commerce
Court No. 01-00858 Page 2
(“Commerce” or the “Department”).1 In Shandong Huarong General
Group Corporation v. United States, 29 CIT , Slip Op. 05-129
(Sept. 27, 2005) (not published in the Federal Supplement)
(“Huarong III”), the court remanded the Department’s second
remand determination in the ninth administrative review of the
antidumping duty order covering the importation of heavy forged
hand tools (“HFHTs”) from the People’s Republic of China (“PRC”).
See HFHTs From the PRC, 66 Fed. Reg. 48,026 (ITA Sept. 17, 2001)
(final determination) (“Final Results”). Plaintiffs Shandong
Huarong General Group Corporation (“Huarong”) and Liaoning
Machinery Import & Export Corporation (“LMC”) (collectively
“plaintiffs” or the “Companies”) challenged that determination
with respect to the Department’s decision to apply adverse facts
available (“AFA”) and to assign the Companies a 139.31 percent2
dumping rate to their sales of bars and wedges.3 The court found
1
Ames True Temper, as amicus curiae, has filed comments
to Commerce’s remand results.
2
In the Final Results, both companies received the PRC-
wide rate for this review of 47.88 percent. See Final Results,
66 Fed. Reg. at 48,028, 48,030.
3
In cases where a respondent:
(A) withholds information that has been
requested by the administering authority or
the Commission under [19 U.S.C. § 1677],
(B) fails to provide such information by the
deadlines for submission of the information
or in the form and manner requested, subject
(continued...)
Court No. 01-00858 Page 3
that Commerce failed to support its selection of the 139.31
percent rate with substantial evidence, that the rate was
aberrational and punitive, and remanded the determination with
instructions for Commerce to select another justifiable rate. On
the third remand, Commerce selected a rate of 47.88 percent to
apply as AFA. See Final Results of Redetermination Pursuant to
Court Remand (ITA Mar. 3, 2006) (“Third Remand Determination”) at
1. The Companies now challenge the Department’s selection on
remand of the 47.88 percent rate applicable to their sales of
bars and wedges. Jurisdiction lies with 28 U.S.C. § 1581(c)
(2000) and 19 U.S.C. § 1516a(a)(2)(B)(iii) (2000). For the
3
(...continued)
to subsections (c)(1) and (e) of section
1677m of this title,
(C) significantly impedes a proceeding under
this subtitle, or
(D) provides such information but the
information cannot be verified as provided in
section 1677m(i) of this title,
the administering authority and the
Commission shall, subject to section 1677m(d)
of this title, use the facts otherwise
available in reaching the applicable
determination under this subtitle.
19 U.S.C. § 1677e(a) (2000).
If Commerce determines that a respondent has “failed to
cooperate by not acting to the best of its ability to comply with
a request for information,” the Department may then “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).
Court No. 01-00858 Page 4
following reasons, the court sustains Commerce’s Third Remand
Determination.
BACKGROUND
The facts of this case have been set forth adequately in the
court’s prior opinions. A brief discussion of the facts relevant
to the instant action follows. In the Final Results, Commerce
used AFA to set the Companies’ dumping margins and assigned the
Companies the PRC-wide rate of 47.88 percent for their sales of
bars and wedges. See Final Results, 66 Fed. Reg. at 48,028. The
court agreed that Commerce supported with substantial evidence
its application of AFA to the Companies, but because it found
that the Companies had demonstrated their independence from the
PRC-wide entity, it remanded the Final Results and instructed
Commerce to assign the Companies separate rates. See Shandong
Huarong Gen. Group Corp. v. United States, 27 CIT 1568, 1596
(2003) (not published in the Federal Supplement) (“Huarong I”);
see also Third Remand Determination at 5 (“Huarong received AFA,
in part, because it failed to report certain transactions as
being its own sales, rather than another company’s sales, while
LMC received AFA because certain transactions it reported as its
own sales were, in fact, made by another company.”). On remand,
Commerce found that the Companies were entitled to separate rates
and assigned each of them an individual rate of 139.31 percent.
Court No. 01-00858 Page 5
That rate was the highest antidumping duty rate from any prior
segment of the proceeding. Because it found that the Department
failed to justify its selection of the 139.31 percent rate, the
court again remanded the matter. See Shandong Huarong Gen. Group
Corp. v. United States, 28 CIT , , Slip Op. 04-117 at 17–18
(Sept. 13, 2004) (not published in the Federal Supplement)
(“Huarong II”).
In accordance with the court’s remand, the Department
attempted to explain its decision to apply the 139.31 percent
rate to the Companies’ sales of bars and wedges, but the court
found the effort insufficient. See Huarong III, 29 CIT at
, Slip Op. 05-129 at 21–22. Specifically, the court found the
rate both aberrational and punitive, and further concluded that
Commerce failed to support adequately the reasonableness and the
relevance of that rate to the Companies’ sales. The court
remanded the matter for a third time with instructions for the
Department to choose from the following two rates: “(1) the
Companies’ rates from a previous review, with a built-in increase
as a deterrent to non-compliance; or (2) a calculated rate that
accurately reflects what the Companies’ rates would have been had
they cooperated, with a built-in increase as a deterrent to non-
compliance.” Id. at , Slip Op. 05-129 at 22.
In the Third Remand Determination, Commerce returned to the
rate of 47.88 percent, which is both the country-wide rate in
Court No. 01-00858 Page 6
this administrative review and the rate calculated for another
company in the 1992–1993 administrative review. See Third Remand
Determination at 1, 4. For the reasons that follow, the court
sustains the selection of that rate.
STANDARD OF REVIEW
The court “shall hold unlawful any determination, finding,
or conclusion 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). “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 (1938)).
The existence of substantial evidence is determined “by
considering the record as a whole, including evidence that
supports as well as evidence that ‘fairly detracts from the
substantiality of the evidence.’” Id. (quoting Atl. Sugar, Ltd.
v. United States, 744 F.2d 1556, 1562 (Fed. Cir. 1984)).
DISCUSSION
When selecting a rate to apply as AFA, “Commerce must do
more than assume any prior calculated margin for the industry is
reliable and relevant.” Ferro Union, Inc. v. United States, 23
Court No. 01-00858 Page 7
CIT 178, 204, 44 F. Supp. 2d 1310, 1334 (1999). Indeed, “[i]n
order to comply with the statute and the [Statement of
Administrative Action]’s statement that corroborated information
is probative information, Commerce must assure itself that the
margin it applies is relevant, and not outdated, or lacking a
rational relationship to [the respondent].” Id. at 205, 44 F.
Supp. 2d at 1335. In its previous remand determination, Commerce
did not meet the standard set forth in Ferro Union. In
particular, Commerce failed to demonstrate either the
reasonableness or the relevance of the 139.31 percent rate to the
Companies. See Huarong III, 29 CIT at , Slip Op. 05-129 at 21;
see also 19 U.S.C. § 1677e(c).4 The court stated that the law
“requires that an assigned rate relate to the company to which it
is assigned.” Huarong III, 29 CIT at , Slip Op. 05-129 at 11.
In addition, the court stated that where a rate from a previous
review is selected as AFA, if that prior rate was a weighted-
average margin, “then the preferred method would be to use the
4
Pursuant to that provision:
When the administering authority or the
Commission relies on secondary information
rather than on information obtained in the
course of an investigation or review, the
administering authority or the Commission, as
the case may be, shall, to the extent
practicable, corroborate that information
from independent sources that are reasonably
at their disposal.
19 U.S.C. § 1677e(c).
Court No. 01-00858 Page 8
Companies’ own weighted-average margins for the same review.”
Id. at , Slip Op. 05-129 at 17. Moreover, the court found that
the 139.31 percent rate selected was aberrational and punitive.
Id. at , Slip Op. 05-129 at 21. Thus, in order to be
sustained, Commerce’s current selection of the 47.88 percent AFA
rate must be both reliable and relevant to the Companies.
In plaintiffs’ view, Commerce failed to corroborate its
selection of the 47.88 percent rate in accordance with 19 U.S.C.
§ 1677e(c). See Pls.’ Comments on Dep’t of Commerce’s Final
Results of Redetermination Pursuant to Court Remand at 7.
Specifically, plaintiffs claim that: (1) Commerce did not
establish the reliability of the 47.88 percent rate because it
failed to support the rate with an independent source; (2)
Commerce failed to explain how a 47.88 percent rate that was
applied to an unrelated company in a prior review was relevant to
the Companies here; and (3) Commerce incorrectly employed a
transaction-specific comparison method to determine the deterrent
amount in contravention of the court’s instructions. See id. at
7, 9, 11–15.
Despite plaintiffs’ contentions, the court finds that
Commerce has explained adequately the reliability and relevance
of the 47.88 percent AFA rate with respect to the Companies’
sales of bars and wedges, and finds the method employed by
Commerce in reaching its conclusion reasonable. Here, Commerce
Court No. 01-00858 Page 9
selected 47.88 percent, the PRC-wide rate for the underlying
review and the rate that was applied to Fujian Machinery &
Equipment Import & Export Corporation (“FMEC”) during the
1992–1993 administrative review of the bars/wedges order, as AFA.
See Third Remand Determination at 4. It selected this rate only
after first finding that, had it cooperated, LMC would have
received a rate of 27.18 percent and, likewise, Huarong would
have been subject to a rate of 34.00 percent. See id. Commerce
based this finding on the highest previously calculated rates for
each company. See id. Commerce then chose to apply the 47.88
percent rate, in part, because that rate, having been previously
verified, was reliable and because the resulting 13.88 percent
increase in Huarong’s rate and the 20.70 percent increase in
LMC’s rate was sufficient to deter any future non-compliance.
See id. at 9.
An AFA rate must be both reliable and bear a rational
relationship to the respondent. See Huarong III, 30 CIT at ,
Slip Op. 05-129 at 11–12; see also F. LLI De Cecco Di Fillippo
Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032
(Fed. Cir. 2000) (“It is clear from Congress’s imposition of the
corroboration requirement in 19 U.S.C. § 1677e(c) that it
intended for an adverse facts available rate to be a reasonably
accurate estimate of the respondent’s actual rate, albeit with
some built-in increase intended as a deterrent to non-
Court No. 01-00858 Page 10
compliance.”). The court finds that Commerce has sufficiently
demonstrated the reliability of the 47.88 percent rate.
According to Commerce:
In accordance with our normal practice, the
Department reviewed all potential rates in
the history of the proceeding which could be
applied as an AFA rate in the underlying
segment. For this remand determination, the
Department has selected as AFA the 47.88
percent calculated for [FMEC], during the
1992–1993 administrative review of the
bars/wedges order. This rate was based upon
verified data and has not been judicially
invalidated.
Third Remand Determination at 4 (citations omitted). Commerce
further stated:
[U]nlike other types of information, such as
input costs or selling expenses, there are no
independent sources for calculated dumping
margins. Thus, in an administrative review,
if the Department chooses as total AFA a
dumping margin from a prior segment of the
proceeding, it is not necessary to question
the reliability of the margin. In the
instant case, the rate selected as AFA, 47.88
percent, was calculated using verified
information provided by FMEC during the
1992–1993 administrative review of the
bars/wedges order. Furthermore, this rate
was not judicially invalidated, and we have
no new information that would lead us to
reconsider the reliability of the rate being
used in this case.
Id. at 5–6 (citations omitted).
In other words, by using a rate from a previous
investigation, Commerce sought to satisfy the reliability
standard found in 19 U.S.C. § 1677e(c). Thus, the court
Court No. 01-00858 Page 11
concludes that Commerce established the rate’s reliability as
required by statute, in part, because the Department selected a
rate that was based on verified information provided by FMEC in
the 1992–1993 review.
In addition, the court finds that Commerce demonstrated the
relevance of the 47.88 percent rate to both Huarong and LMC. In
this case, to satisfy the court’s concerns with respect to the
relevance of the rate to the Companies, Commerce first estimated
what the Companies’ rates would have been had they cooperated.
[F]or non-cooperative respondents, a
conservative estimate of the lower bound
[sic] of what the respondent’s margin would
be had it cooperated is the highest-weighted
average margin calculated for that respondent
in a prior review. In this case, using the
conservative assumption, the Department
expects that, at a minimum, Huarong and LMC
would have received dumping margins of 34.00
and 27.18 percent, respectively, had they
cooperated.
Third Remand Determination at 9. The Department then considered
an amount to be added to those rates to deter future non-
compliance. To test the relevance of that additional amount to
the Companies, Commerce examined the Companies’ transaction-
specific margins. See id. (“These transaction-specific margins
are actual margins calculated for the respondent in question and
demonstrate the highest margins of dumping made by the respondent
when selling subject merchandise in the U.S. market.”). That is,
to determine an appropriate amount to add to the Companies’
Court No. 01-00858 Page 12
previously calculated rates, Commerce compared the Companies’
highest transaction-specific margins to the 47.88 percent rate.
Commerce made the comparison for each company. After
comparing Huarong’s highest transaction-specific margins to
available verified rates, Commerce found that the 47.88 percent
rate was relevant. Specifically, Commerce found:
(1) all of Huarong’s positive transaction-
specific margins are above 47.88 percent, the
quantity of these transactions is not
insignificant, and these sales are not
aberrational; (2) there are no other
previously calculated, weighted-average rates
from which to select as AFA that are greater
than 47.88 percent but less than the range of
transaction-specific margins; and (3)
selecting a rate lower than 47.88 percent
would not act as an effective deterrent in
light of the high transaction-specific
margins. For these reasons, the transaction-
specific margins are evidence that the 47.88
percent rate is relevant to Huarong and
provides the appropriate deterrent to future
non-compliance.
Id. at 10. Similarly, with respect to LMC, Commerce concluded:
21 percent of LMC’s transaction-specific
margins were positive (i.e., greater than
zero) and that all of these positive
transaction-specific margins were high,
although not quite as high as Huarong’s
positive transaction-specific margins. . . .
[T]he Department is applying the same AFA
rate to LMC as it is to Huarong because LMC
identified certain transactions in the
underlying review as its own sales, when, in
fact, they were not. . . . For this
redetermination, we find that selecting 47.88
as the AFA rate is also relevant for the
following reasons relating to transaction-
specific margins: (1) all of LMC’s positive
transaction-specific margins are above 47.88
Court No. 01-00858 Page 13
percent, the quantity of these transactions
is not insignificant, and these sales are not
aberrational; (2) there are no other
previously calculated, weighted average rates
from which to select as AFA that are greater
than 47.88 percent but less than the range of
transaction-specific margins; and (3)
selecting a rate lower than 47.88 percent
would not act as an effective deterrent in
light of the high transaction-specific
margins.5
Id. at 10–11 (citations omitted). Therefore, Commerce determined
that based on a comparison of the 47.88 percent rate to the
Companies’ transaction-specific margins, the 13.88 percent
increase for Huarong and the 20.70 percent increase for LMC would
serve as an appropriate deterrent to future non-compliance.
To further justify the relevance of these rates, the
Department examined the variation in the Companies’ margins over
prior reviews. With respect to Huarong, Commerce observed that
the dumping margin assigned to that company for its sales of bars
and wedges in the 1996–1997 review was a calculated 34.00
percent. See Third Remand Determination at 12. In the 1997–1998
review, Huarong received a calculated rate of 1.27 percent. See
id. Huarong then received a calculated 27.28 percent rate in the
1998–1999 review, the review immediately preceding the underlying
review. See id. Likewise, Commerce found that LMC has also
5
While what Commerce says is true, it is worth noting
that the vast majority of the Companies’ transaction-specific
margins were calculated to be 0.0 percent. See Huraong III, 29
CIT at , Slip Op. 05-129 at 17 (finding that over 83 percent of
the transactions were at zero margins).
Court No. 01-00858 Page 14
received varying dumping margins from review to review.
Specifically, in the 1996–1997 review, when LMC was first
assigned a calculated rate for its sales of bars and wedges, it
received a 2.94 percent rate. See id. In the 1997–1998 review,
LMC was assigned a 0.0 percent rate. See id. That changed,
however, in the 1998–1999 review, where LMC was assigned a
calculated rate of 27.18 percent. See id.
Thus, Commerce’s chosen rate is not dramatically different
from those fluctuating rates that the Companies previously
received. That is, it is not unreasonable for Commerce to allot
to Huarong an approximate thirteen-percentage-point increase from
its highest calculated rate of 34.00 percent as a deterrent, and
it is equally permissible for Commerce to add a twenty-
percentage-point increase over LMC’s highest previously
calculated rate as a deterrent. Thus, unlike in Huarong III,
where the court found a more than 110 percentage point increase
to be aberrational and punitive, the 47.88 percent rate is not so
high as to be aberrational.
Having considered plaintiffs’ arguments with respect to the
relevance of the chosen rate and Commerce’s explanation of its
decision to apply a rate of 47.88 percent to the Companies’ sales
of bars and wedges, the court finds that: (1) Commerce
established the reliability and relevance of the rate to both
Huarong and LMC; and (2) the method by which Commerce reached its
Court No. 01-00858 Page 15
conclusion was reasonable. Therefore, the court sustains the
Third Remand Determination.
CONCLUSION
Based on the foregoing, the court sustains Commerce’s Third
Remand Determination and its selection of 47.88 percent as the
rate to be applied to Huarong and LMC as AFA for their sales of
bars and wedges. Judgment shall be entered accordingly.
/s/Richard K. Eaton
Richard K. Eaton
Dated: January 9, 2007
New York, New York
Slip Op. 07-4
UNITED STATES COURT OF INTERNATIONAL TRADE
:
SHANDONG HUARONG GENERAL :
GROUP CORPORATION and :
LIAONING MACHINERY IMPORT :
& EXPORT CORPORATION, :
: Before: Richard K. Eaton, Judge
Plaintiffs, :
: Court No. 01-00858
v. :
:
UNITED STATES, :
:
Defendant. :
:
JUDGMENT
This case having been duly submitted for decision; and the
court, after due deliberation, having rendered a decision herein;
Now therefore, in conformity with said decision, it is hereby
ORDERED that the United States Department of Commerce’s
Final Results of Redetermination Pursuant to Court Remand
Shandong Huarong General Group Corporation and Liaoning Machinery
Import & Export Corporation v. United States, Court No. 01-00858,
are sustained.
/s/Richard K. Eaton
Richard K. Eaton
Dated: January 9, 2007
New York, New York