POGUE, Chief Judge:
This consolidated action returns to court,
Plaintiffs are, in part, correct. Commerce has not articulated a rational connection between the record evidence and the rate applied to the separate rate companies, nor has Commerce explained how its determination bears a relationship to Plaintiffs' economic reality. Accordingly, the court remands to Commerce for further consideration in accordance with this opinion.
This dispute originates in a petition by the Coalition for American Hardwood Parity
In addition, because this was a non-market economy ("NME") investigation,
Plaintiffs sought judicial review of the Final Determination pursuant to 19 U.S.C. §§ 1516a(a)(2)(A)(i)(II) and 1516a(a)(2)(B)(i), and Commerce requested a voluntary remand. The court affirmed in part and remanded in part. The court affirmed Commerce's rejection of Respondents' late filed surrogate financial statements. The court remanded to Commerce for reconsideration the surrogate value ("SV") determinations for Layo's plywood input and Samling's HDF input; remanded for reconsideration Commerce's targeted dumping determination, in light of any changes to the surrogate value determinations and current standards; and remanded for further explanation or reconsideration the surrogate value determination for Layo's core veneer, Layo's HDF input, and Layo's brokerage and handling ("B & H") fees to account for the cost of a letter of credit. Baroque III, ___ C.I.T. at ___, 925 F.Supp.2d at 1337; see also Remand Results at 1-2.
In its Redetermination, Commerce revised its findings as required by Baroque III. Commerce (1) valued Layo's plywood input with an SV reflecting plywood thicknesses of 6.35 mm and 12.7 mm; (2) valued Samling's high-density fiberboard ("HDF") with Philippine Harmonized Tariff Schedule ("HTS") category 4411.11; (3) valued Layo's core veneer input with 2009 data reported by the Global Trade Atlas for Philippine HTS category 4408.9090.06; (4) provided further explanation for Commerce's determination "to continue converting SV for [Layo's] HDF using the average density of HDF used by [Layo]"; (5) adjusted Layo's "B & H SV to remove letter of credit costs not incurred by [Layo]"; and, (6) calculated Layo's and Samling's dumping margins "using an average-to-average comparison method, rather than the average-to-transaction comparison method." Remand Results at 2.
As a result of these changes, not only Yuhua, but also Layo and Samling received dumping margins of zero. Id. at 26.
The court will uphold Commerce's determinations 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).
Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (quoting Consol. Edison Co. of New York v. N.L.R.B., 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). It must be "more than a scintilla, and must do more than create a suspicion of the existence of the fact to be established." N.L.R.B. v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300, 59 S.Ct. 501, 83 L.Ed. 660 (1939). In making its judgment, the court "looks to the record as a whole, including any evidence that fairly detracts from the substantiality of the evidence," Gallant Ocean (Thailand) Co., Ltd. v. U.S., 602 F.3d 1319, 1323 (Fed.Cir. 2010) (internal quotation marks and citation omitted),
In essence, the substantial evidence standard asks whether Commerce's determination was reasonable. Nippon Steel, 458 F.3d at 1351 (quoting SSIH Equipment SA v. United States ITC, 718 F.2d 365, 381 (Fed.Cir.1983) (Nies, J. additional comments)).
Otherwise lacking statutory guidance,
Section 1673d(c)(5)(A) provides the general rule,
Here, because on remand the mandatory respondents all had weight-averaged dumping margins of zero, Commerce calculated the separate rate margin under the Section 1673d(c)(5)(B) "any reasonable method" provision. Remand Results at 45. Commerce took a simple average of the three mandatory respondent zero rates and the PRC-wide AFA rate. Id.
Section 1673d(c)(5) does not say whether a simple average of three zero percent mandatory respondent rates and the PRC-wide AFA rate is reasonable. Because the statute does not "directly address the precise question at issue," the court is left to decide whether Commerce's interpretation is "a reasonable construction of the statute." Bestpak, 716 F.3d at 1377.
Section 1673d(c)(5)(B)'s breadth and flexibility allow for a contextual application of the statute.
While Commerce's chosen method may not be per se unreasonable, it must still be reasonable as applied.
When the problem is dumping, any method Commerce employs must be "based on the best available information and establish[] antidumping margins as accurately as possible." Shakeproof Assembly Components, Div. of Ill. Tool Works, Inc. v. United States, 268 F.3d 1376, 1382 (Fed.Cir.2001).
Because judicial review of an administrative decision must be made on the grounds relied on by the agency,
In its Redetermination, Commerce did not consider whether use of an AFA rate, let alone use of the selected transaction-specific margin, was merited in its separate rates calculation. Nor did Commerce consider its responsibility to determine a separate rate that bears some relationship to respondents' actual rates. Rather, Commerce explains that its use of the AFA rate in the separate rate calculation is reasonable because Commerce needed to account for the non-cooperating, PRC-wide companies in the investigation. Remand Results at 46. Because some companies refused to respond to Commerce's requests for Q & V data, Commerce correctly notes that it lacks a complete data set. Commerce suggests that because any of the non-cooperating companies could or "may have been selected" as a mandatory respondent, Commerce must account for them in some way in the separate rate calculation. Commerce suggests that it cannot be sure that the mandatory respondents are reflective of the separate rate respondents. Id.
While Commerce may draw reasonable inferences from the failure of uncooperative respondents to provide evidence of the size, quantity, and value of their sales, doing so does not provide a rationale for the redetermination made here. The mere presence of non-cooperating parties "fails to justify [Commerce's] choice of dumping margin for the cooperative uninvestigated respondents." Amanda Foods (Vietnam) Ltd. v. United States, 33 C.I.T. 1407, 647 F.Supp.2d 1368, 1381 (2009) ("Amanda Foods I").
Application of the AFA rate to non-cooperating parties is a rebuttable presumption. See Rhone Poulenc, 899 F.2d at 1190-91. A rebuttable presumption is not evidence. New York Life Ins. Co. v. Gamer, 303 U.S. 161, 170, 58 S.Ct. 500, 82 L.Ed. 726 (1938).
Moreover, Commerce failed to make any connection between the transaction-specific margin of 25.62 percent and separate rate respondents' pricing practices. Commerce
It is, of course, correct that, to calculate the separate rate in the Redetermination, Commerce has moved from (a modified application of) the general rule of 19 U.S.C. § 1673d(c)(5)(A) to the exception in 19 U.S.C. § 1673d(c)(5)(B), reflecting changes in the mandatory rates. But Commerce has failed to consider its responsibility to determine rates that bear some relationship to respondents' actual rates, to their economic reality, rendering its chosen method unreasonable. Whether under the general rule or the exception, the mandatory respondents are meant to be representative of the industry, and therefore of the separate rate respondents. See 19 U.S.C. § 1677f-1(c)(2).
While it is true that under substantial evidence the court "do[es] not make the determination," it "merely vet[s] the determination," Nippon Steel, 458 F.3d at 1352, "that the scope of such review is narrowly circumscribed is beside the point," Chenery, 318 U.S. at 94, 63 S.Ct. 454, where, as here, Commerce's redetermination fails to articulate the required rational connection between the facts found and the rate chosen. It therefore fails substantial evidence review.
It is lawful for Commerce to draw reasonable inferences from uncooperative companies' failure to submit evidence of the size, quantity, and value of their sales, and to use a method reasonably derived from the relevant statutory language. But substantial evidence asks a more specific question, and requires a more specific explanation from Commerce.
Accordingly, this matter is affirmed in part and remanded in part to Commerce for further consideration in accordance with this opinion. Commerce shall have until May 8, 2014 to complete and file its remand redetermination. Plaintiffs shall have until May 22, 2014 to file comments. Defendant and Defendant-Intervenors shall have until June 6, 3014 to file any reply.
Plaintiffs' motion to strike Defendant-Intervenor's (CAHP's) arguments against these findings is therefore DENIED AS MOOT. See Motion to Strike Section I(B) of Defendant-Intervenor CAHP's Remand Reply Comments of Alternative Motion for Leave to File Comments in Response to CAHP's Remand Reply Comments, ECF No. 142; Motion of Zhejiang Layo Wood Industry Co., Ltd. to Strike Portions of Coalition for Hardwood Parity's Reply to Comments on Remand Redetermination, ECF No. 143; Defendant-Intervenor's Response to Motion to Strike Portions of Reply to Comments on Remand Redetermination, ECF No. 147.
The Statement of Administrative Action (the "SAA," which is recognized by Congress as an authoritative expression concerning the interpretation and application of the Tariff Act of 1930 under 19 U.S.C. § 3512(d)), provides that the "expected method" under the exception is to "weight-average the zero and de minimis margins and margins determined pursuant to the facts available," where "volume data is available," but "if this method is not feasible, or if it results in an average that would not be reasonably reflective of potential dumping margins for non-investigated exporters or producers, Commerce may use other reasonable methods." Uruguay Round Agreements Act, SAA, H.R. doc. No. 103-316 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4201.
Accordingly, arbitrary and capricious review considers and requires much of the same factual support and reasoning as substantial evidence, but with a less searching review. Cf. In re Sang Su Lee, 277 F.3d at 1342. It is therefore pertinent to a substantial evidence review as the `very least' an agency must do for its determination to be rooted in fact and considered reasonable.
Amanda Foods II, 714 F.Supp.2d at 1291.
Commerce would distinguish the instant case from Bestpak on two grounds: First, here the AFA rate is better grounded in economic reality. While the Bestpak AFA was based on a petition rate, the AFA rate here is the "highest transaction-specific margin calculated for a mandatory respondent," and therefore "reflects actual economic activity." Remand Result at 48. Second, the instant administrative record is fuller than the Bestpak record. Id. at 48-49. Commerce would argue that these show that the separate rate here is grounded in economic reality.
But Commerce misunderstands Bestpak. The Bestpak court did not require that the separate rate be grounded in economic reality generally, or to the factual record generally, but rather that it must bear some relationship to respondents' economic reality and factual situation. Bestpak, 716 F.3d at 1380 ("[R]ate determinations for nonmandatory, cooperating respondents must ... bear some relationship to their actual dumping margins."). Commerce has not made this connection here. Commerce has not shown how the method chosen reflects or has some reasonable relationship to the economic reality of separate rate companies. Commerce's method is therefore still unreasonable in application.
Commerce's use here of its reasoning in Lined Paper Products from India, Issues & Decision Mem., A-533-843, POR Sept. 1, 2010 — Aug. 31, 2011 (Apr. 9, 2013) (adopted in 78 Fed.Reg. 22,232 (Dep't of Commerce Apr. 15, 2013)) (final results of antidumping duty administrative review, 2010-11 cmt. 5 at 14, fails here for the same reason: those arguments do not touch on the separate rate respondents' economic reality.