Globe Metallurgical, Inc. v. United States

Slip-Op 04-123

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
GLOBE METALLURGICAL, INC. :
and SIMCALA, INC., :
:
Plaintiffs, :
:
v. :
:
UNITED STATES, :
: Consol. Court No.
Defendant, : 03-00202
:
and :
:
BRATSK ALUMINIUM SMELTER :
and RUAL TRADE LIMITED, :
:
Defendant-Intervenors. :
________________________________________:

This consolidated action concerns the claims raised by
plaintiffs, Globe Metallurgical, Inc. and SIMCALA, Inc.
(collectively, “Plaintiffs”), and defendant-intervenors, Bratsk
Aluminium Smelter and Rual Trade Limited (collectively, “Defendant-
Intervenors”), who move pursuant to USCIT R. 56.2 for judgment upon
the agency record challenging the Department of Commerce,
International Trade Administration’s (“Commerce”) final
determination, entitled Notice of Final Determination of Sales at
Less Than Fair Value for Silicon Metal From the Russian Federation,
(“Final Determination”), 68 Fed. Reg. 6,885 (Feb. 11, 2003), as
amended by Notice of Amended Final Determination of Sales at Less
Than Fair Value for Silicon Metal From the Russian Federation,
(“Amended Final Determination”) 68 Fed. Reg. 12,037 (Mar. 13,
2003).

Plaintiffs challenge two aspects of the Final Determination.
First, Plaintiffs argue that Commerce improperly excluded a
surrogate value cost of recycled fines from the calculation of
normal value (“NV”) and ultimately understated NV and the dumping
margin. Second, Plaintiffs contend that Commerce improperly
rejected a non-aberrational Egyptian surrogate market economy price
of imported wood charcoal and, therefore, violated past agency
practice.
Consol. Court No. 03-00202 Page 2

Defendant-Intervenors contend that 19 U.S.C. § 1677b (2000),
regulations promulgated by Commerce, and caselaw do not require
Commerce to base factor values on prices in a surrogate country
that are different from the country under investigation.
Defendant-Intervenors also contend that Commerce failed to use the
best available information when determining not to use post non-
market economy (“NME”) Russian values for the period of
investigation (“POI”). Defendant-Intervenors argue that Commerce
improperly calculated NV by failing to use the post-NME Russian
values in evaluating the reliability of potential surrogate values.

Held: The anti-dumping duty statute does not foreclose
Commerce from using a former NME—now market economy—country’s
values to calculate NV for the same country’s factors of production
during a POI in which the country was an NME country.
Consequently, Commerce failed to sufficiently explain its exclusion
of market economy Russian values for silicon metal. Commerce must
explain why market economy Russian values are not the best
available information. Commerce must also explain its decision to
exclude recycled silicon metal fines as a factor of production for
the production of silicon metal. Commerce properly rejected
Egyptian values and chose values from Thailand for wood charcoal.

[Plaintiff’s 56.2 motion is denied in part. Case remanded.]

Date: September 24, 2004

Piper Rudnick LLP, (William D. Kramer and Clifford E. Stevens,
Jr.), for Globe Metallurgical, Inc. and SIMCALA, Inc., plaintiffs.

Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director; Jeanne E. Davidson, Deputy Director; Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Michael Panzera); of counsel: Jonathan J. Engler, Office
of the Chief Counsel for Import Administration, United States
Department of Commerce, for the United States, defendant.

Shearman & Sterling LLP, (Jeffrey M. Winton and Sam J. Yoon
and Quentin M. Baird), for Bratsk Aluminium Smelter and Rual Trade
Limited, defendant-intervernors.
Consol. Court No. 03-00202 Page 3

OPINION

TSOUCALAS, Senior Judge: This consolidated action concerns

the claims raised by plaintiffs, Globe Metallurgical, Inc. and

SIMCALA, Inc. (collectively, “Plaintiffs”), and defendant-

intervenors, Bratsk Aluminium Smelter and Rual Trade Limited

(collectively, “Defendant-Intervenors”), who move pursuant to USCIT

R. 56.2 for judgment upon the agency record challenging the

Department of Commerce, International Trade Administration’s

(“Commerce”) final determination, entitled Notice of Final

Determination of Sales at Less Than Fair Value for Silicon Metal

From the Russian Federation, (“Final Determination”), 68 Fed. Reg.

6,885 (Feb. 11, 2003), as amended by Notice of Amended Final

Determination of Sales at Less Than Fair Value for Silicon Metal

From the Russian Federation, (“Amended Final Determination”) 68

Fed. Reg. 12,037 (Mar. 13, 2003).

Plaintiffs challenge two aspects of the Final Determination.

First, Plaintiffs argue that Commerce improperly excluded a

surrogate value cost of recycled fines from the calculation of

normal value (“NV”) and ultimately understated NV and the dumping

margin. Second, Plaintiffs contend that Commerce improperly

rejected a non-aberrational Egyptian surrogate market economy price

of imported wood charcoal and, therefore, violated past agency

practice.
Consol. Court No. 03-00202 Page 4

Defendant-Intervenors contend that 19 U.S.C. § 1677b (2000),

regulations promulgated by Commerce, and caselaw do not require

Commerce to base factor values on prices in a surrogate country

that are different from the country under investigation.

Defendant-Intervenors also contend that Commerce failed to use the

best available information when determining not to use post non-

market economy (“NME”) Russian values for the period of

investigation (“POI”). Defendant-Intervenors argue that Commerce

improperly calculated NV by failing to use the post-NME Russian

values in evaluating the reliability of potential surrogate values.

BACKGROUND

This case concerns the antidumping duty order on silicon metal

from Russia for the POI covering July 1, 2001, through December 31,

2001. See Final Determination, 68 Fed. Reg. at 6,885. Commerce

initiated the investigation on April 3, 2002. Notice of Initiation

of Antidumping Duty Investigation for Silicon Metal From the

Russian Federation, 67 Fed. Reg. 15,791 (Apr. 3, 2002). On April

30, 2002, Commerce issued a memorandum identifying the Philippines,

Egypt, Thailand, Columbia, and Tunisia as appropriate surrogate

countries for Russia. See Pls.’ App. Br. Supp. Mot. J. Upon Agency

R. (“Globe’s App.”) at Ex. 7. On June 6, 2002, in a separate

proceeding, Commerce determined to treat Russia as a market economy

country effective April 1, 2002, three months after the end of the
Consol. Court No. 03-00202 Page 5

POI. See Globe Metallurgical, Inc. SIMCALA, Inc.’s Br. Opp’n

Brastk’s Mot. J. Upon Agency R. (“Globe’s Opp’n Br.”) at 5. On

September 20, 2002, Commerce published its preliminary

determination, finding that silicon metal from Russia was being

sold at less-than-fair-value. Notice of Preliminary Determination

of Sales at Less Than Fair Value and Postponement of Final

Determination for Silicon Metal From the Russia Federation

(“Preliminary Determination”), 67 Fed. Reg. 59,253 (Sept. 20,

2002). For its Preliminary Determination, Commerce selected Egypt

as the primary surrogate country. See id. On February 11, 2003,

Commerce published its final determination. See Final

Determination, 68 Fed. Reg. at 6,885. Commerce subsequently

published an amended final determination on March 13, 2003. See

Amended Final Determination, 68 Fed. Reg. at 12,037.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 19

U.S.C. § 1516a(a) (2000) and 28 U.S.C. § 1581(c) (2000).

STANDARD OF REVIEW

In reviewing a challenge to Commerce's final determination in

an antidumping administrative review, the Court will uphold

Commerce's determination unless it is "unsupported by substantial

evidence on the record, or otherwise not in accordance with law .
Consol. Court No. 03-00202 Page 6

. . ." 19 U.S.C. § 1516a(b)(1)(B)(I) (2000).

I. Substantial Evidence Test

Substantial evidence is “more than a mere scintilla. It means

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 (S. Ct. 1951) (quoting Consolidated Edison Co. v.

NLRB, 305 U.S. 197, 229 (S. Ct. 1938)). Substantial evidence “is

something less than the weight of the evidence, and the possibility

of drawing two inconsistent conclusions from the evidence does not

prevent an administrative agency's finding from being supported by

substantial evidence.” Consolo v. Federal Maritime Comm'n, 383

U.S. 607, 620 (1966) (citations omitted). Moreover, “the court may

not substitute its judgment for that of the [agency] when the

choice is 'between two fairly conflicting views, even though the

court would justifiably have made a different choice had the matter

been before it de novo.’” American Spring Wire Corp. v. United

States, 8 CIT 20, 22, 590 F. Supp. 1273, 1276 (1984) (quoting

Penntech Papers, Inc. v. NLRB, 706 F.2d 18, 22-23 (1st Cir. 1983)

(quoting, in turn, Universal Camera, 340 U.S. at 488)).

II. Chevron Two-Step Analysis

To determine whether Commerce's interpretation and application

of the antidumping statute is “in accordance with law,” the Court

must undertake the two-step analysis prescribed by Chevron U.S.A.
Consol. Court No. 03-00202 Page 7

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984). Under the first step, the Court reviews Commerce's

construction of a statutory provision to determine whether

“Congress has directly spoken to the precise question at issue.”

Id. at 842. “To ascertain whether Congress had an intention on the

precise question at issue, [the Court] employ[s] the ‘traditional

tools of statutory construction.’” Timex V.I., Inc. v. United

States, 157 F.3d 879, 882 (Fed. Cir. 1998) (citing Chevron, 467

U.S. at 843 n.9). “The first and foremost ‘tool’ to be used is the

statute’s text, giving it its plain meaning. Because a statute’s

text is Congress’ final expression of its intent, if the text

answers the question, that is the end of the matter.” Id.

(citations omitted). Beyond the statute’s text, the tools of

statutory construction “include the statute's structure, canons of

statutory construction, and legislative history.” Id. (citations

omitted); but see Floral Trade Council v. United States, 23 CIT 20,

22 n.6, 41 F. Supp. 2d 319, 323 n.6 (1999) (noting that “not all

rules of statutory construction rise to the level of a canon”)

(citation omitted).

If, after employing the first prong of Chevron, the Court

determines that the statute is silent or ambiguous with respect to

the specific issue, the question for the Court becomes whether

Commerce's construction of the statute is permissible. See
Consol. Court No. 03-00202 Page 8

Chevron, 467 U.S. at 843. Essentially, this is an inquiry into the

reasonableness of Commerce's interpretation. See Fujitsu Gen. Ltd.

v. United States, 88 F.3d 1034, 1038 (Fed. Cir. 1996). Provided

Commerce has acted rationally, the Court may not substitute its

judgment for the agency's. See Koyo Seiko Co. v. United States, 36

F.3d 1565, 1570 (Fed. Cir. 1994) (holding that “a court must defer

to an agency's reasonable interpretation of a statute even if the

court might have preferred another”); see also IPSCO, Inc. v.

United States, 965 F.2d 1056, 1061 (Fed. Cir. 1992). The “Court

will sustain the determination if it is reasonable and supported by

the record as a whole, including whatever fairly detracts from the

substantiality of the evidence.” Negev Phosphates, Ltd. v. United

States, 12 CIT 1074, 1077, 699 F. Supp. 938, 942 (1988) (citations

omitted). In determining whether Commerce's interpretation is

reasonable, the Court considers the following non-exclusive list of

factors: the express terms of the provisions at issue, the

objectives of those provisions, and the objectives of the

antidumping scheme as a whole. See Mitsubishi Heavy Indus. v.

United States, 22 CIT 541, 545, 15 F. Supp. 2d 807, 813 (1998).

BACKGROUND

I. Factual Background

During the Cold War, Commerce considered the Soviet Union an

NME country, a status Russia inherited. On June 6, 2002, Commerce
Consol. Court No. 03-00202 Page 9

determined that Russia had shifted to a market economy and revoked

Russia’s NME status. See Br. Bratsk Aluminum Smelter & Rual Trade

Ltd. Supp. R. 56.2 Mot. J. Agency R. (“Bratsk’s Br.”) at Ex. 1.

Effective April 1, 2002, Russia was treated as a market economy

country by Commerce.1 See id. On March 7, 2002, however, two

United States producers filed a petition alleging that imports of

silicon metal from Russia were being sold in the United States at

less-than-fair-value. Commerce began its investigation on April 3,

2002 and used its NME methodology during the investigation because

the POI predated the effective date of Russia’s new status. See

Def.’s Mem. Opp’n Pls.’ Mot. J. Upon Agency R. (“Commerce’s Mem.”)

at 7.

1
In determining to revoke Russia’s NME status, Commerce
stated:

There will necessarily be a period of time during
which antidumping duty rates, based on the non-
market economy calculation methodology, will remain
in effect. For existing antidumping duty orders,
the non-market economy-based rates will remain in
effect until they are changed as a result of a
review, pursuant to [19 U.S.C. § 1675] of a
sufficient period of time after April 1, 2002. For
on going investigations, because the period of
investigation pre-dates the effective date of this
determination, [Commerce] will continue to utilize
non-market economy methodologies in those
investigations.

See Bratsk’S Br., Ex. 1 at 2.
Consol. Court No. 03-00202 Page 10

Commerce identified a non-exclusive list of potential

surrogate countries comparable to Russia in terms of economic

development, based on the most recent available data. See Globe’s

Opp’n Br. at 3-4. This list included the Philippines, Egypt,

Thailand, Columbia, and Tunisia. See id. Commerce permitted

comments from silicon metal producers from Russia and the domestic

industry regarding the factor values to be used in calculating NV.

Plaintiffs identified Egypt as the most appropriate surrogate

country while Defendant-Intervenors first identified South Africa

and then post-NME Russia as possible surrogates for Russia. See

id. at 4-5. Plaintiffs proposed that Commerce use a value for

charcoal, an input into silicon metal, based on the 1998 United

Nations Commodity Trade Statistics (“UNCTS”) data for wood charcoal

imported into Egypt. See Pls.’ Br. Supp. Mot. J. Upon Agency R.

(“Globe’s Br.”) at 11. Commerce rejected Egyptian values as

unreliable and unusable because Egypt had negligible imports of

wood charcoal in 1998 and 1999. See id. at 12-13. After reviewing

UNCTS data for wood charcoal from Thailand, Colombia, the

Philippines and Tunisia, Commerce selected Thai values because

Thailand had a significant quantity of imports of wood charcoal.

See Br. Bratsk Aluminum Smelter & Rual Trade Ltd. Resp. Pls.’ R.

56.2 Mot. J. Agency R. (“Bratsk’s Resp. Br.”) at 10.2

2
After the Preliminary Determination, Commerce gave the
interested parties a final opportunity to submit additional
Consol. Court No. 03-00202 Page 11

For the Final Determination, Commerce valued charcoal using a

Thai import value, which was less than half of the Egyptian and

South African charcoal values submitted by Plaintiffs and

Defendant-Intervenors, respectively. See Globe’s Br. at 14. The

Thai values were also substantially lower than the surrogate values

Commerce selected for valuing the less expensive reductants,3 coal

and petroleum coke. See id. Commerce used Thai import values

because Thailand was the only potential surrogate with a

significant quantity of imports of wood charcoal. See Commerce’s

Mem. at 11-12. In addition, Thailand produces steel which is

comparable to silicon metal. See id.

Commerce rejected Defendant-Intervenors argument that Russian

values should be used to value the factors of production and other

expenses. See Globe’s Opp’n Br. at 7. Commerce determined that

Egypt’s level of economic development and the merchandise produced

is comparable to Russia. See Commerce’s Mem. at 10. Commerce also

found reasonably complete information for valuing the factors of

information on the appropriate factor values. See Bratsk’s Resp.
Br. at 11. Plaintiffs submitted a value for charcoal obtained from
an Egyptian ferroalloy company which produced ferrosilicon, a
product very similar to silicon metal in terms of the production
process and inputs. See Globe’s Br. at 14.
3
Reductants such as coal, charcoal, and petroleum coke are
used in the process of making silicon metal and, therefore, are all
inputs considered to be factors of production. See Globe’s Br. at
14.
Consol. Court No. 03-00202 Page 12

production in Egypt. See id. Consequently, Commerce determined

that Egypt was the appropriate primary surrogate country for

Russia. See id. Commerce relied upon Egyptian price data from the

UNCTS for 1998 or 1999. See id. Commerce declined to use post-NME

Russian price data to value the factors of production for NME

Russian. See id. Commerce explained that its NME methodology

relies upon selecting a surrogate market economy to value the

factors of production, which precludes the use of Russia itself as

a source for surrogate values. See id. Commerce also rejected the

use of post-NME Russian values as a “benchmark” with which to

measure the reliability of potential surrogate values. See id. at

11-12. Commerce noted that in the past it has compared potential

surrogate values to United States prices and world prices in

determining whether the surrogate values are aberrational. See id.

II. Statutory Background

In conducting an administrative review, Commerce determines

the antidumping duty margin by taking the difference between NV and

the United States price of the merchandise. When merchandise is

produced in an NME country there is a presumption that exports are

under the control of the state. Section 1677b(c) of Title 19 of

the United States Code provides that, “the valuation of the factors

of production shall be based on the best available information

regarding the values of such factors in a market economy country or
Consol. Court No. 03-00202 Page 13

countries considered to be appropriate by [Commerce].” 19 U.S.C.

§ 1677b(c)(1) (2000). The statute, however, does not define the

phrase “best available information,” it only provides that,

“[Commerce], in valuing factors of production . . . shall utilize,

to the extent possible, the prices or costs of factors of

production in one or more market economy countries that are—(A) at

a level of economic development comparable to that of the nonmarket

economy country, and (B) significant producers of comparable

merchandise.” 19 U.S.C. § 1677b(c)(4). To determine the

comparability of a market economy country’s economic development

with that of an NME country, Commerce “will place primary emphasis

on per capita GDP as the measure of economic comparability.” 19

C.F.R. § 351.408(b) (2001). Nonetheless, Commerce is given broad

discretion “to determine margins as accurately as possible, and to

use the best information available to it in doing so.” Lasko Metal

Prods., Inc. v. United States, 43 F.3d 1442, 1443 (Fed. Cir. 1994).

DISCUSSION

I. Commerce Failed to Sufficiently Justify Excluding Russian
Values for Silicon Metal From Russia

A. The Anti-dumping Duty Statute Does Not Foreclose Commerce
from Using Market Economy Russian Values to Calculate
Factors of Production

The anti-dumping duty statute does not prohibit Commerce from

using data from the same country, a market economy, in calculating
Consol. Court No. 03-00202 Page 14

the NV when during the POI the country was an NME country.

Defendant-Intervenors contend that Commerce must consider Russian

market economy values in determining NV for Russian silicon metal.

See Bratsk’s Br. at 11-18. Plaintiffs and Commerce respond that

Russian values are unavailable for the calculation of NV because

Russia cannot serve as a surrogate country for itself. See Globe’s

Opp’n Br. at 11-18; Commerce’s Mem. at 16-25. Accordingly,

Commerce asserts that it properly did not consider post-NME Russia

as a possible surrogate country. See Commerce’s Mem. at 16. The

availability of the market economy Russian values arises out of

Commerce’s interpretation and application of the antidumping

statute. Consequently, the Court must undertake Chevron’s two-step

analysis to determine if Commerce’s interpretation of the statute

is permissible. See Chevron, 467 U.S. at 837.

1. Chevron’s First Step

A Chevron analysis begins with an examination of the plain

language of the statute. See Timex V.I., 157 F.3d at 882. The

statute states in pertinent part:

(1) In general
If—
(A) the subject merchandise is exported from a
nonmarket economy country, and
(B) the administering authority finds that available
information does not permit the normal value of the
subject merchandise to be determined under subsection
(a)of this section,
the administering authority shall determine the normal
value of the subject merchandise on the basis of the
Consol. Court No. 03-00202 Page 15

value of the factors of production utilized in producing
the merchandise and to which shall be added an amount for
general expenses and profit plus the cost of containers,
coverings, and other expenses. Except as provided in
paragraph (2), the valuation of the factors of production
shall be based on the best available information
regarding the values of such factors in a market economy
country or countries considered to be appropriate by the
administering authority.

(2) Exception
If the administering authority finds that the
available information is inadequate for purposes of
determining the normal value of subject merchandise under
paragraph (1), the administering authority shall
determine the normal value on the basis of the price at
which merchandise that is—
(A) comparable to the subject merchandise, and
(B) produced in one or more market economy countries
that are at a level of economic development comparable to
that of the nonmarket economy country,

is sold in other countries, including the United States.

***

(4) Valuation of factors of production
The administering authority, in valuing factors of
production under paragraph (1), shall utilize, to the
extent possible, the prices or costs of factors of
production in one or more market economy countries that
are—
(A) at a level of economic development comparable to
that of the nonmarket economy country, and
(B) significant producers of comparable merchandise.

19 U.S.C. § 1677b(c) (emphasis added).

Sections 1677b(c)(1) and (4) of Title 19 of the United States

Code specifically authorize, but do not require, Commerce to use

surrogate countries to calculate NV. See Shakeproof Assembly

Components, Div. of Ill. Tool Works, Inc. v. United States, 268
Consol. Court No. 03-00202 Page 16

F.3d 1376, 1381 (Fed. Cir. 2001). The statute requires that NV be

calculated on the basis of the value of the factors of production

utilized in producing the merchandise. See 19 U.S.C. §

1677b(c)(1). Valuation of the factors of production must be based

on the best available information in a market economy country or

countries considered to be appropriate by Commerce. See 19 U.S.C.

§ 1677b(c)(4). The statutory language is ambiguous because the

word “considers” implies that Commerce is afforded a level of

discretion in selecting appropriate countries for the calculation

of NV. The statute, however, also requires that Commerce choose

from the best available information. The statutory language does

not plainly indicate whether market economy Russian values are

available for calculating NME Russian factors of production.

Accordingly, to determine the meaning of the statute, the Court

must look to the tools of statutory construction, including “the

statute’s structure, canons of statutory construction, and

legislative history.” See Timex V.I, 157 F.3d at 882.

The structure of the antidumping duty statute does not

indicate whether the values from Russia are available to calculate

NME Russian factors of production. Commerce argues that while the

antidumping duty statute does not specifically use the term

“surrogate country,” the statute clearly contemplates that the

country selected cannot be the one under investigation because the
Consol. Court No. 03-00202 Page 17

statute uses the term “comparable.” See Commerce’s Mem. at 17-18.

The statute, however, only requires Commerce to determine NV from

the values it selects from one or more market economy countries “to

the extent possible.” 19 U.S.C. § 1677b(c)(4) (emphasis added).

When those values are not available or unreliable, Commerce is

directed to use other information in order to calculate NV.4 See

Shakeproof, 268 F.3d at 1381. The Court of Appeals for the Federal

Circuit has held that Commerce may reject surrogate values when

there are other methods of determining the “best available

information” regarding the values of the factors of production.

See Lasko, 43 F.3d at 1446; see also Nation Ford Chem. Co. v.

United States, 166 F.3d 1373, 1378 n.5 (Fed. Cir. 1999) (stating

that the antidumping duty statute “does not preclude consideration

of pricing or costs beyond the surrogate country if necessary”).

The regulations also do not require the use of another

country’s values to serve as a surrogate. Moreover, the

regulations do not preclude the use of the same country’s market

economy values in the evaluation of a POI during which the country

was an NME. Commerce’s regulations state that “[e]xcept for labor

. . . [Commerce] normally will value all factors in a single

4
Commerce notes that it “did accept actual Russian import
prices paid by [Defendant-Intervenors] for inputs where those
inputs were purchased from a market economy.” See Commerce’s Mem.
at 11.
Consol. Court No. 03-00202 Page 18

surrogate country” and, “[f]or manufacturing overhead, general

expenses, and profit, [Commerce] normally will use non-proprietary

information gathered from producers of identical or comparable

merchandise in the surrogate country.” 19 C.F.R. § 351.408(c)(2)

& (4) (2001). Commerce intends to use a “single surrogate country”

to produce most of the values necessary to calculate NV. See 19

C.F.R. § 351.408(c)(2). The qualifier “normally,” however,

provides Commerce with the discretionary power to determine if a

surrogate country is necessary.

The Court next examines the legislative history of the

statute. In 1979, Congress enacted Section 773 of the Tariff Act

of 1930, encoded as 19 U.S.C. 1677b(1979), updating the language

with minor modifications to the Antidumping Act of 1921. See S.

REP. NO. 96-249 (1979). From 1979 until 1988, Commerce was

instructed to calculate NV using surrogate data when available.

See 19 U.S.C. § 1677b(c) (1979).5 The 1988 Trade Act replaced the

5
In pertinent part, this section states that for state-
controlled economies Commerce shall:

determine the foreign market value of the merchandise on
the basis of the normal costs, expenses, and profits as
reflected by either—,
(1) the prices determined in accordance with subsection
(a) of this section, at which such or similar merchandise
of a non-State-controlled-economy country or countries is
sold either—,
(A) for consumption in the home market of that
country or countries, or
(B) to other countries, including the United
Consol. Court No. 03-00202 Page 19

surrogate country methodology for calculating NV on the basis of

surrogate countries, in favor of a factors of production analysis.

See 19 U.S.C. § 1677b(c). The surrogate methodology has been

expressly abandoned by Congress as the primary means of evaluating

NV for NME countries. Consequently, Commerce’s contention that the

statute contemplates the use of surrogate countries as the only

means to calculate NV fails.

The shift from the surrogate method to the factors of

production method reveals that Congress did not intend Commerce to

exclusively rely on surrogate data. Rather, Congress intended

Commerce to use other data when more appropriate. Congress

instructs Commerce to “determine foreign market value using a

constructed value methodology based on the factors of production

utilized in producing the merchandise subject to investigation.”

H.R. CONF. REP. No. 100-576, 590 (1988). Congress further states

that “[t]he factors would be valued from the best available

evidence in a market economy country (or countries) that is at a

comparable level of economic development as the country subject to

investigation and is a significant producer of the comparable

States; or
(2) the constructed value of such or similar merchandise
in a non-State-controlled economy country or countries as
determined under subsection (e) of this section.

19 U.S.C. § 1677b (1979).
Consol. Court No. 03-00202 Page 20

merchandise. Id. In its valuation of factors of production,

“Commerce shall avoid using any prices which it has reason to

believe or suspect may be dumped or subsidized prices.” Id. The

Court finds that the statute and its legislative history are

ambiguous as to whether Commerce could use the values from post-NME

Russia to assess factors of production for the period during which

Russia was considered an NME country. Accordingly, the Court must

undertake the second step of Chevron and determine if Commerce’s

statutory interpretation appropriately filled the gap left by

Congress.

2. Chevron’s Second Step

The Court examines Commerce’s interpretation of the statute

according to the following non-exclusive list of factors: “the

express terms of the provision at issue, the objectives of those

provisions and the objectives of the antidumping scheme as a

whole.” Mitsubishi, 22 CIT at 545, 15 F. Supp. 2at 813. Commerce

construes the statute to forbid the use of values from post-NME

Russia for the calculation of factors of production within a POI

during which Russia was considered an NME country.

The overarching goal of the antidumping duty statute is to

determined dumping margins as accurately as possible. Rhone

Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir.
Consol. Court No. 03-00202 Page 21

1990). While Section 1677b(c)(1) does not directly address the

situation when NME countries become market economy countries, the

objective of the statute is to accurately predict NV as if the NME

country was a market economy country. See Crawfish Processors

Alliance v. United States, 2004 Ct. Intl. Trade LEXIS 46, at *19

(CIT May 6, 2004) (stating that “Commerce’s discretion in choosing

its information is limited by the statute’s ultimate goal ‘to

construct the product’s normal value as it would have been if the

NME country were a market economy country.’” (quoting) Rhodia Inc.

v. United States, 25 CIT 1278, 1286, 185 F. Supp. 2d 1343, 1351

(2001)). The goal of the statute is not punitive; the goal is to

level the playing field for United States producers of similar

goods with producers in an NME country. See Allied Tube & Conduit

Corp. v. United States, 24 CIT 1358, 1370, 127 F. Supp. 2d. 207,

218 (2000) (noting that “[a]ntidumping laws are not punitive in

nature, but are designed to remedy the inequities caused by unfair

trade practices”).

The most accurate information, perhaps, in evaluating the

factors of production from an NME country would be to turn that

country into a market economy. Commerce usually evaluates factors

of production from a different country to determine the NV of a

product from an NME country. Under some circumstances, however,

where the NME country has become a market economy, the post-NME
Consol. Court No. 03-00202 Page 22

values will best serve as representative of the values of the NME

country as if it were a market economy. Because the purpose of the

statute is remedial rather than punitive, and Commerce is directed

to use the best information available, foreclosing the possibility

of using accurate information would be contrary to the purpose of

the statute. There may be situations where information from a

different country would be more reliable, accurate, and predictable

for Commerce to use in calculating NV. A country that becomes a

market economy three months after the POI is uniquely comparable to

the same country as an NME during the POI. The post-NME Russian

values satisfy the antidumping duty statute’s requirement to use

data collected from a market economy. Accordingly, the Court finds

that Commerce erred in not considering these values in its factors

of production analysis. Commerce should not have rejected these

market economy values from Russia merely because the country had

been considered an NME country in the recent past. Rather,

Commerce should have considered post-NME Russian data in making its

determination as to what constitutes the best available

information.

Congress does not speak to the situation when an NME country

becomes a market economy country shortly after the POI. Congress,

however, requires Commerce to use the best available information in

determining the most accurate, fair, and predictable calculations
Consol. Court No. 03-00202 Page 23

of NV. See Shakeproof, 268 F.3d at 1382 (“[T]he critical question

is whether the methodology used by Commerce is based on the best

available information and establishes antidumping margins as

accurately as possible”). Congress has expressed its intent that

Commerce make the most accurate determination possible with respect

to NV. Commerce’s interpretation of the statute—as precluding the

use of Russian market economy data in determining the factors of

production for Russia when it was an NME country—is unreasonable.

Accordingly, the Court finds that Russian market economy values

were available for Commerce to calculate NV in the case at bar if

Commerce determines that these values are the best information

available.

B. Commerce Must Explain Why post-NME Russian Values Are Not
the Best Available Information

Defendant-Intervenors argue that the statutory requirement of

best available information requires Commerce to use the post-NME

Russian values to calculate NV. See Bratsk’s Br. at 13-15.

Commerce and Plaintiffs respond that Commerce has the discretion to

determine what constitutes the best available information. See

Commerce’s Mem. at 19; Globe’s Opp’n Br. at 14. In the case at

bar, Commerce used values from Egypt, Thailand, and South Africa.

Commerce also selected Russian import values from market economy

country suppliers as opposed to values from post-NME Russia.
Consol. Court No. 03-00202 Page 24

Commerce based its decision to reject Russian values after April 1,

2002, because the POI ended three months earlier. Commerce,

however, has previously used factor values relating to a time

period different from the POI. See e.g., Notice of Preliminary

Determination of Sales at Less Than Fair Value and Postponement of

Final Determination for Non-Malleable Cast Iron Pipe Fittings From

the People’s Republic of China, 67 Fed. Reg. 60,214, 60,218 (Sept.

25, 2002); Notice of Preliminary Determination of Sales at Less

Than Fair Value and Postponement of Final Determination for Carbon

and Certain Alloy Steel Wire Rod From Ukraine, 67 Fed. Reg. 17,367,

17,373 (Apr. 10, 2002); Notice of Preliminary Determination of

Sales at Less than Fair Value for Steel Concrete Reinforcing Bars

from Moldova, 66 Fed. Reg. 8,333, 8,337-38 (Jan. 30, 2001).

The Egyptian values Commerce used were collected in 1999,

which was at least a year and a half earlier than the POI. See

App. Br. Bratsk Aluminum Smelter & Rual Trade Ltd. Supp. Pls.’ R.

56.2 Mot. J. Agency R. (“Bratsk’s App.”) at Ex. 2. If the

contemporaneous requirement is satisfied by values collected a year

and a half earlier than the POI, then values collected three months

after the POI should also meet the contemporaneous requirement.

Commerce should have explained why the post-NME Russian data fails

to satisfy the contemporaneous requirement in determining the

reliability of the factors of production. Commerce failed to fully
Consol. Court No. 03-00202 Page 25

examine the reliability of the Russian values because it had

determined that the Russian values were unavailable. The Court

remands this issue to Commerce with instruction to use post-NME

Russian values or explain why such values are not the best

information available.

II. Commerce Properly Rejected Egyptian Values and Used Values
from Thailand for Wood Charcoal

Plaintiffs contend that Commerce improperly valued charcoal

using an understated Thai value. See Globe’s Br. at 8. Plaintiffs

argue that Egyptian charcoal values were not aberrational and,

therefore, should have been used instead of the Thai charcoal

values, which were aberrational and understated. See id. at 10.

Commerce responds that the Egyptian charcoal values were

appropriately excluded because they were aberrational. See

Commerce’s Mem. at 13. Commerce asserts that the Thai charcoal

values were selected in accordance with law and based on

substantial evidence. See id. at 29-31. For the reasons set forth

below, the Court agrees with Commerce.

The antidumping duty statute requires Commerce to calculate NV

by determining the values of the factors of production in an NME

country using the best available information. See 19 U.S.C.
Consol. Court No. 03-00202 Page 26

1677b(c). The statute provides little guidance as to what

constitutes best available information. Consequently, Commerce is

accorded “wide discretion in the valuation of factors of production

in the application of those guidelines.” Nation Ford, 166 F.3d at

1377. Thus, “Commerce need not prove that its methodology was the

only way or even the best way to calculate surrogate values for

factors of production as long as it was reasonable.” Shandong

Huarong Gen. Corp. v. United States, 25 CIT 834, 840, 159 F. Supp.

2d 714, 721 (2001). A court may measure Commerce’s reasonableness

by determining whether Commerce’s actions are consistent with a

past practice or stated policy, or if, in failing to do so,

Commerce provides a reasonable explanation. See Hebei Metals &

Minerals Imp. & Exp. Corp. v. United States, 2004 Ct. Intl. Trade

LEXIS 89, at *34-35 (CIT Jul. 19, 2004) (citing Citrosuco Paulista,

S.A. v. United States, 12 CIT 1196, 1209 (1988)).

Pursuant to the best available information requirement,

Commerce selects countries with similar economic characteristics,

and uses values from the surrogate country to represent each factor

of production. See 19 C.F.R. § 351.408. After selecting

appropriate surrogate values, Commerce calculates NV by multiplying

the reported quantities by the selected surrogate values for the

different inputs. Because the best available information

requirement is only satisfied when the surrogate values evidence a
Consol. Court No. 03-00202 Page 27

rational and reasonable relationship to the factor of production it

represents, Commerce often uses more than one country to select

surrogate values. See Olympia Industrial, Inc. v. United States,

22 CIT 387, 390, 7 F. Supp. 2d 997, 1001 (1998) (“Commerce has an

obligation to review all data and then determine what constitutes

the best available information or, alternatively, to explain why a

particular data set is not methodologically reliable.”). Commerce

will disregard values from the primary surrogate country when it

finds those values to be (1) unavailable; (2) not sufficiently

contemporaneous; (3) of poor quality, or (4) otherwise unreliable,

i.e., aberrational. Notice of Final Results of Antidumping Duty

Administrative Review of Silicomanganese From the People’s Republic

of China, 65 Fed. Reg. 31,514 (May 18, 2000). Consequently,

Commerce must compare the reliability of each potential surrogate

country’s values to determine which values are most reliable. See

Olympia, 22 CIT at 390, 7 F. Supp. 2d at 1001.

In the case at bar, Commerce examined the import quantities

and prices of wood charcoal imports to test the reliability of the

values. See Commerce’s Mem. at 26-29. Commerce determined that

Egypt had low import quantities of wood charcoal, 24 metric tons in

1998 and 36 metric tons in 1999, and, therefore, disregard Egyptian

values. See id. at 27-28. Choosing to disregard primary

surrogate country values based upon aberrationally low import
Consol. Court No. 03-00202 Page 28

quantities is consistent with a past practice of Commerce upheld by

the Court. See Anshan Iron & Steel v. United States, 2003 Ct.

Intl. Trade Lexis 109, at *40 (CIT July 16, 2003) (stating that

Commerce’s decision to use a particular set of “values because it

determined that Plaintiffs’ imports . . . were too minimal to

provide an adequate surrogate value for its substantial domestic

purchases . . . was supported by substantial evidence and in

accordance with law”). Commerce determined that the low quantities

of Egyptian imports would distort its calculations. Commerce’s

practice has been to “disregard small-quantity import data when the

per-unit value is substantially different from the per-unit value

of larger quantity imports of that product from other countries.”

Shakeproof Assembly Components Div. Of Ill. Tool Works, Inc. v.

United States, 23 CIT 479, 485, 54 F. Supp. 2d 1354, 1360 (1999).

In rejecting the use of Egyptian prices for wood charcoal, the

Court finds that Commerce has satisfied its duty to provide a

reasonable explanation for its determination.

Thai values for wood charcoal were chosen by Commerce because

Thailand had a high volume of wood charcoal imports suggesting that

the values were reliable. See Bratsk’s App., Ex. 2 at 19-20. This

explanation is consistent with Commerce’s past practice to examine

reliability of values based upon import quantities. See Anshan,

2003 Ct. Intl. Trade Lexis 109, at *40. Plaintiffs contend,
Consol. Court No. 03-00202 Page 29

however, that the Thai wood charcoal values are aberattionally low

because two other products, coal and petroleum coke, should be

higher than the value of charcoal. See Globe’s Br. at 24.

Plaintiffs note that the Russian producers reduced their reliance

on charcoal in favor of coal and petroleum coke because these

materials were cheaper. See id. The Court finds Plaintiffs

arguments unpersuasive. Plaintiffs fail to show that the 1999

Egyptian values for coal and petroleum coke which Commerce

acceptedare in any way related to the 2001 value for wood charcoal

from Russia, Egypt, and Thailand. Moreover, the values for wood

charcoal were calculated using UNCTS data whose numerical

reliability is not in question.

In examining the contemporaneity of the potential surrogate

values with the POI, Commerce determined that Thai wood charcoal

values were the best available information. Because the POI for

this case was July to December 2001, the 2001 Thai values were more

contemporaneous than the 1998 and 1999 Egyptian values. While

Thailand does not have a silicon metal industry, the wood charcoal

values are acceptable because Thailand produces steel and refines

primary and secondary metal, industries which Commerce determined

are comparable. See Bratsk’s App., Ex. 2 at 19-20. Therefore,

Commerce reasonably explained its use of Thai values, as Thailand

produced a “comparable merchandise” as required by 19 U.S.C. §
Consol. Court No. 03-00202 Page 30

1677b(c). Commerce’s determination to use Thai values for wood

charcoal is upheld as reasonable and in accordance with law.

III. Commerce Must Explain Its Decision to Exclude Recycled
Silicon Metal Fines as a Factor of Production

Plaintiffs contend that Commerce failed to include recycled

silicon metal fines in the factor of production calculations for

silicon metal from Russia. See Globe’s Br. at 18-21. Commerce

asks for an opportunity to explain its decision. See Commerce’s

Mem. at 31-32. Accordingly, the Court remands this issue to give

Commerce the opportunity to explain its exclusion of recycled

silicon metal fines from the factor of production cost analysis.

CONCLUSION

The Court finds that Commerce’s determination to use values

for wood charcoal from Thailand is supported by substantial

evidence and in accordance with law. This case is remanded to

Commerce with instructions (1) to use post-NME Russian values or

explain why Russian values are not the best information available

for the calculation of NV, and (2) to explain Commerce’s exclusion
Consol. Court No. 03-00202 Page 31

of recycled silicon metal fines from the factor of production cost

analysis.

/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE

Dated: September 24, 2004
New York, New York