OPINION

POGUE, Chief Judge:

This case returns to court following remand to the Department of Commerce ("Commerce" or "the Department") by Thai Plastic Bags Industries Co., Ltd. v. United States, 37 CIT ____, 904 F.Supp.2d 1326 (2013) ("TPBI Remand Order").2 The Department responded to the TPBI Remand Order by issuing its Results of Remand Redetermination Pursuant to Court Remand, A-549-821, ARP 09-10 (Jul. 10, 2013), ECF Nos. 87, 89 ("Remand Results").

The parties here raise two challenges to the Remand Results. First, respondent Plaintiffs claim that Commerce improperly increased Thai Plastic Bags Industries Co., Ltd.'s ("TPBI") home market general and administrative ("G & A") expenses by failing to exclude from, or "offset," those expenses by the amount of revenue from the sale of certain assets. Second, Defendant-Intervenors Polyethylene Retail Carrier Bag Committee, Hilex Poly Company, LLC, and Superbag Corporation (collectively the "Domestic Producers") claim that the Department has improperly reduced the surrogate selling expenses for respondent Landblue (Thailand) Co., Ltd. ("Landblue"). In the alternative, the Domestic Producers argue that the Department should, if allowed to reduce Landblue's selling expenses, calculate a profit amount derived from the same source (TPBI) rather than the surrogate producer selected by the Department, Thantawan Industry Public Company Limited ("Thantawan").

For the reasons stated below, the Department's remand determinations are affirmed. Commerce's denial of an offset to G & A expenses for revenue from the sale of land and buildings properly applies a Department policy intended to increase the accuracy of dumping margin calculations in a manner supported by the record evidence presented. The reduction of surrogate selling expenses, which reflects the distinction between direct and indirect costs, is neither beyond the discretion of the Department nor unsupported by substantial evidence on the record. Finally, the Department was not obliged to seek additional information from TPBI to calculate a profit amount after it reasonably determined to use Thantawan as a surrogate for Landblue.

BACKGROUND

A. Department of Commerce Determinations and the TPBI Remand Order

The TPBI Remand Order followed a review of the Department's determinations in Polyethylene Retail Carrier Bags From Thailand, 76 Fed.Reg. 59,999 (Dep't Commerce Sept. 28, 2011) (final results) ("Final Results") and accompanying Issues & Decision Mem., A-549-821, ARP 09-10 (Sept. 21, 2011) ("I & D Memo"). The Final Results calculated dumping margins for the two exporter/respondent companies under review, TPBI and Landblue. In making these calculations, the Department exercised its authority under section 773(e)(2)(B) of the Tariff Act of 1930, 19 U.S.C. § 1677b(e)(2)(B)3 to "construct" or estimate actual costs of a respondent's sales where valid comparison sales in the exporting country were not available. See Final Results at 60000, 60001. Both the Domestic Producers and the Plaintiff exporter/respondents challenged aspects of the Department's constructed value ("CV") calculations in a consolidated action here. TPBI Remand Order. Of these challenges, the TPBI Remand Order identified two issues requiring additional consideration.

First, the Department had calculated a reduction in its estimates of TPBI's G & A expenses by "offsetting" or reducing those expenses by the amount of revenues from certain asset sales taking place during the period of review ("POR"). I & D Memo at cmt. 1. In doing this, the Department applied a general policy allowing reductions for any gains made in the "routine disposition of assets" in order to more accurately calculate the dumping margin. Id.4 The TPBI Remand Order concluded that the Department's grant to TPBI of an offset for revenue from the sale of certain land and fixed assets, despite indicia that the sale was not conducted in the routine course of business, was not adequately supported by evidence on the record. TPBI Remand Order at 1331. The decision to provide an offset for these revenues was therefore remanded to the Department for further consideration.

Second, the Department calculated a normal or home market value for Landblue by approximating Landblue's selling expenses using Landblue's own ratio of direct to indirect selling expenses and applying that ratio to the selling expenses reported by Thantawan, a Thai surrogate company selected because, during the POR, it produced "similar merchandise, [had] a similar customer base, and operated with a profit." I & D Memo at cmt. 5.5 The decision to apply the Landblue ratio to Thantawan's selling expenses represented an acknowledgement by the Department that Thantawan's reported selling expenses did not disaggregate direct expenses associated with export sales from indirect expenses that would apply to both domestic and export sales. Id. Because Thantawan's expenses were not allocated or identified as direct and indirect, the Department determined that the accuracy of the CV calculated for Landblue would be greater if some correction were made for the over-inclusion of selling expenses in the surrogate's financial statement. Id.; Remand Results at 7. To make this correction, the Department applied Landblue's direct/indirect expense ratio to Thantawan's reported selling expenses to generate the amount. But the decision to use Landblue's own direct/indirect expense ratio was based on assumptions about the similarity of the expenses incurred by the two companies.

The TPBI Remand Order found these assumptions to be contradicted by facts on the record. Specifically, the Department did not address the fact that Landblue, with no domestic sales at all, was likely to incur a different ratio of direct and indirect selling expenses than a company selling largely within its home market. TPBI Remand Order at 1334. As a result, it was not clear from the record evidence that applying the Landblue ratio would serve the statutory purpose of making as accurate a determination as possible. This determination was also therefore remanded to the Department for reconsideration.

B. Challenged Remand Results

To address the two issues on remand, the Department gathered additional information and revised its determinations based on the resulting, more complete factual record.

First, the Department's reconsideration of the revenue offsets allowed for TPBI's sale of assets was based on answers submitted by TPBI to a Department questionnaire intended to better identify the type of sales that generated the contested revenues. Remand Results at 4. Based on its analysis of this additional information, the Department determined that the portion of revenues attributable to the sale of an office building and associated land should not be classified as part of the company's routine operations. Instead, the Department found that this was a singular sale of fixed assets generating nonrecurring gains. This determination was based on both the relative size of the transaction and the business circumstances that surrounded the sale. Id. at 5-6. Therefore the Department, on remand, eliminated the deduction of that portion of TPBI's gain from its calculation of its G & A expenses. Id. at 6.

Second, Commerce addressed the remaining issue on remand by opening the record to collect additional data from both Landblue and TPBI regarding the breakdown of their direct and indirect selling expenses. Commerce then re-examined the use of Thantawan as a surrogate for calculating Landblue's selling expenses and reconsidered the application of a direct/indirect ratio to Thantawan's reported selling expenses. Remand Results, app. B at 2; id. app. A ("Analysis Memo") at 3; id. at 13, 17. Based on the additional data collected from Landblue and TPBI, the Department a) affirmed its determination that using Thantawan as a surrogate for Landblue's selling expenses is justified, b) affirmed the determination that applying some reduction to Thantawan's selling expenses is justified, and c) determined that the types of selling expenses incurred by Thantawan and TPBI were sufficiently similar to justify applying TPBI's direct/indirect selling expense ratio—rather than Landblue's—to the reported selling expenses in calculating a CV for Landblue. Finally, the Department declined to re-open its determination of an appropriate profit figure for Landblue to use surrogate data rather than TPBI's proprietory information.

STANDARD OF REVIEW

"The court will sustain the Department's determination upon remand if it complies with the court's remand order, is supported by substantial evidence on the record, and is otherwise in accordance with law." Jinan Yipin Corp. v. United States, ___ CIT ___, 637 F.Supp.2d 1183, 1185 (2009) (citing 19 U.S.C. § 1516a(b)(1)(B)(i)).

This standard precludes arbitrariness in the application of antidumping laws. An agency decision is arbitrary, inter alia, if it applies different standards of judgment to similar cases without adequate explanation and factual support on the record. See Transactive Corp. v. United States, 91 F.3d 232, 237 (D.C.Cir.1996) ("an agency action is arbitrary when the agency offered insufficient reasons for treating similar situations differently.")

DISCUSSION

A. The Exclusion of Revenues From the Sale of Land in Calculating TPBI's G & A Expenses

Based on the additional information gathered by the Department, revenue from TPBI's sale of a parcel of land and associated buildings have been appropriately excluded from gains incurred in the routine operation of business and therefore not used as the basis for an offset or deduction from TPBI's G & A expenses.6

TPBI argues that this analysis has not been properly conducted in classifying their reported sale of an office building and parcel of land. Plaintiffs' Comments Concerning Commerce's Final Results of Redetermination, ECF No. 92 at 5. Noting that in some prior determinations the Department has found that land sales are classified as routine expenses which are appropriately the basis for a G & A revenue offset, TPBI claims that the Department has determined that the land and building sales were significant and non-routine "without material analysis or discussion." Id. at 4-5.

Despite Plaintiffs' claim, the analysis and evidence submitted with the Remand Results are sufficient to support the Department's classification of this transaction. See Analysis Memo at 2. The Department distinguishes between the sale of capital equipment and the sale of an office building and associated land, reviews the criteria for considering such a sale to be outside the scope of routine business operations, and notes that the large scale of the revenues from the building transaction relative to the other transactions conducted during the same period make it "significant" as the term is used in this type of analysis. Id. at 2, 3.7 The analysis conducted by the Department in the Analysis Memo is comparable to the analysis that determined the result cited by the Plaintiff in Polyethylene Terephthalate Film, Sheet, and Strip from the Republic of Korea, 75 Fed.Reg. 70,901 (Dep't of Commerce Nov. 19, 2010) (final results) and accompanying Issues & Decision Mem., A-580-807 at cmt. 3. In both cases, the character of the transaction and its significance were evaluated—the former by its relationship to the company's line of business and the latter based on the revenue generated relative to other transactions. The Department's classification is therefore consistent with its established practice and supported by a reasonable reading of the facts on the record.

B. Application of TPBI's Ratio of Direct to Indirect Selling Expenses to Thantawan's Reported Selling Expenses

As noted above, in response to this aspect of the TPBI Remand Order, Commerce gathered additional information and made three significant conclusions based on an evaluation of the expanded record. First, it affirmed its determination that Thantawan represents an adequate surrogate for Landblue's selling expenses. Remand Results at 11. Second, it affirmed the previous determination that the goal of calculating the most accurate CV requires that Thantawan's financial statement of its selling expense be modified to reflect the distinction between direct and indirect expenses. Remand Results at 10, 19. Third, the Department determined that the similarity in market positions between Thantawan and TPBI makes the use of TPBI's ratio of direct to indirect selling expenses—rather than Landblue's—the most accurate way of calculating a CV for Landblue. Remand Results at 10.

Of these determinations, the Domestic Producers object to the second on the same grounds articulated in their initial brief prior to the TPBI Remand Order. See Reply Brief of the Polyethylene Retail Carrier Bag Committee, et al. in Support of Their Motion for Judgment on the Agency Record, ECF Nos. 50, 51 ("Domestic Producer's Brief") at 10-12. Specifically, the Domestic Producers argue that Commerce has had a consistent practice since 2007 of never disaggregating line items on financial statements because of the Department's concern that doing so might introduce distortions rather than increase accuracy. See Defendant-Intervenors' Comments Concerning Commerce's Final Results of Redetermination Pursuant to Court Remand, ECF No. 91 ("Domestic Producers' Comments") at 3. If such a practice exists, the court is obliged to ascertain whether the determination in this case has been supported by sufficient reasons for deviating from the practice and treating similar situations differently. See Transactive Corp. v. United States, 91 F.3d 232, 237 (D.C.Cir.1996).

In support of their argument, the Domestic Producers cite four prior antidumping determinations claimed to articulate this general policy of never disaggregating line-items. See Coated Free Sheet Paper from the People's Republic of China, 72 Fed.Reg. 60,632 (Dep't Commerce Oct. 25, 2007) (final determination) and accompanying Issues & Decision Memorandum, A-570-906 ("Free Sheet Paper") at cmts. 4, 5; Wooden Bedroom Furniture from the People's Republic of China, 76 Fed.Reg. 49,729 (Dep't Commerce Aug. 11, 2011) (final results) and accompanying Issues & Decision Mem., A-570-890 ("WBF 2011 I & D Memo") at cmt. 19(A)(iv); Polyethylene Terephthalate Film, Sheet, and Strip from the People's Republic of China, 77 Fed.Reg. 14,493 (Dep't Commerce Mar. 12, 2012) (final results) and accompanying Issues & Decision Mem., A-570-924 ("PET Film 2012") at Issue 18; Certain Coated Paper Suitable for High Quality Print Graphics Using Sheet-Fed Presses from the People's Republic of China, 75 Fed.Reg. 59,217 (Dep't Commerce Sep. 27, 2010) (final determination) and accompanying Issues & Decision Mem., A-570-958 ("Coated Paper") at cmt. 32. In addition, the Domestic Producers allege that this Court has acknowledged the existence of Commerce's practice in Dongguan Sunrise Furniture Co., Ltd. v. United States, 36 CIT ___, 865 F.Supp.2d 1216, 1244 (2012).

To determine whether such a policy exists and whether the Department is engaged in arbitrary behavior by violating that policy in this instance, it is necessary to examine the Domestic Producers' claims in detail. Conceding that Department policy allowed it to disaggregate balance sheet line items in 2005, the Domestic Producers claim that the Department introduced a new policy in "late 2007" that precluded disaggregating line items in a financial statement.9

The first authority cited by the Domestic Producers to support this claim is Free Sheet Paper at comments 4 and 5. While the Department in this determination did refuse to disaggregate a balance sheet line item, it neither established a new policy on this question nor dismissed its prior practice of balancing the chance of improving accuracy against the danger of introducing distortion. Instead, the Department expressed a "preference" for using unmodified surrogate data,10 justified its decision specifically with reference to the balancing test that the Domestic Producers claim it discarded,11 and explained how the then instant case differed from the HRS from Romania determination of 2005 in ways that justified a different outcome.12 Thus, based on a close examination of Free Sheet Paper Determination in 2007, it is difficult to accept the Domestic Producers' claim that this 2007 determination establishes a new policy or rejects in principle the disaggregation of balance sheet line items under all circumstances. The balancing of the need to improve accuracy and the danger of introducing distortion was still used in this determination, but the Department found that, given the facts and circumstances in that case, the test justified its preference not to go behind balance sheet line items when doing so was not supported by adequate data on the record. Id. at cmt. 4.

The second citation presented by the Domestic Producers to support their claim that the Department has a policy of never going behind financial statement line items comes from the WBF 2011 I & D Memo. The extended quotation from this memo presented by the Domestic Producers, however, has a number of problems. First, roughly half of the quotation provided is quoted in turn from Pure Magnesium in Granular Form from the People's Republic of China, 66 Fed.Reg. 49,345 (Dep't Commerce Sept. 27, 2001) (final determination) and accompanying Issues & Decision Mem., A-570-864 ("Pure Magnesium from China") at cmt. 4, a determination made in 2001.13 It therefore appears that the Domestic Producers are supporting a claim regarding a new policy, alleged to come into existence in 2007, by ultimately citing a determination written in 2001—a time in which the Domestic Producers admit that the Department's policy allowed "going behind" financial statement line items. As significantly, Pure Magnesium from China based its decision on a line of determinations running back to the mid-1990's that were developed specifically to avoid distortions when the surrogate for an NME producer was unlikely to face costs similar to those of the ME surrogate or when differences in national accounting systems made disaggregating costs likely to produce distortions.14 In addition, Pure Magnesium from China justifies the Department's decision by referring to Pure Magnesium from the Russian Federation, 66 Fed.Reg. 49,347 (Dep't Commerce Sept. 27, 2001) (final determination) and accompanying Issues & Decision Mem., A-821-813 ("Pure Magnesium from Russia") at cmt. 2, a determination made concurrently and on the same grounds. In Pure Magnesium from Russia, the Department justified its decision not to go behind financial statement line items as the best way to achieve accuracy in the absence of sufficient information; that is, when certain circumstances are present such as a comparison between an NME producer and an ME surrogate, the balance can be presumed to weigh against uninformed modification of balance sheet items.15

Simply put, it appears that the Domestic Producers are correct that Commerce has articulated a practice of not going behind line items, but the Domestic Producers neglect to mention factors in the cited determinations that a) place limiting conditions on the application of that policy and b) explain the reasons why this general practice was adopted—reasons that are absent in the present case. The policy, applied since at least 1996 and consistent with HRS from Romania in 2005, is repeatedly stated to serve the goal of balancing increasing accuracy against the danger of introducing distortions in cases where either the difference between NME and ME producers or differences between the nationality of producers would make line-by-line comparisons misleading. Each of the Determinations cited by the Domestic Producers explain the Department's decision not to disaggregate surrogate balance sheet items in those cases with reference to this balancing test and support the decision not to disaggregate by citing either problems of incommensurability or a lack of reliable data on the record.16 Neither of these circumstances are present in the instant case, making the Department's application of the underlying balancing test an appropriate exercise of discretion similar to HRS from Romania.17

Finally, the Domestic Producers cite an acknowledgement by this court of the alleged policy in 2012. See Dongguan Sunrise Furniture Co., Ltd. v. United States, 36 CIT ___, 865 F.Supp.2d 1216, 1244 n.43 (2012). Both the decision in that case and the precedent relied upon by the court in reaching it, however, are clearly permissive rather than mandatory.18 The court acknowledged in both cases that the Department has the discretion under 19 U.S.C. § 1677b(c)(4) to refrain from disaggregating balance sheet line items when there was significant uncertainty that disaggregation would produce more accuracy.

Based on this examination of the determinations cited by the Domestic Producers, a better understanding of the Department's policy emerges. At least since the 1996 TRB from Romania Determination, the Department has developed a preference for accepting surrogate balance sheet items in toto for three reasons. First, the difficulty of comparing the costs facing ME and NME producers in detail made it unlikely that correcting individual surrogate balance sheet items would improve accuracy and highly likely that they would introduce distortion.19 Second, different national accounting standards and production processes made it likely that introducing corrections based on surrogates in other countries would introduce distortions.20 Third, the inability to gather detailed information about non-party surrogates in third countries meant that disaggregation of balance sheet line items would likely be based on incomplete information.21

Applying these criteria to the present case supports the Department's position. First and most obvious, the Department's policy against disaggregation is intended to apply in NME cases where a CV is being calculated based on a surrogate producer in a third country. Landblue does not present such a case, as both Thantawan and TPBI are, like Landblue, operating in the same market economy. Second, the policy is intended to guard against the uncertainties that arise when comparing producers operating in different national environments where accounting standards, industry norms, or other factors increase the danger of introducing distortions by attempting to "correct" balance sheet items. These dangers are absent here; the record shows that both the respondent and the surrogate are Thai producers operating in the same economic environment and producing similar products for similar markets. Only the third criterion—the problem of gathering record evidence directly from the surrogate—would weigh against disaggregation.22

Based on this, the Department here has adequately justified the application of its longstanding balancing test between improving accuracy and the danger of introducing distortion in this case. The policy articulated in HRS from Romania in 2005 was not discarded or superseded in Free Sheet Paper, but distinguished by the Department on the grounds noted above. The Determinations cited by the Domestic Producers do not demonstrate that a new policy was introduced in 2007. The Department's "determination based upon the facts unique to each case, and pursuant to a consistent goal" of balancing the possibility of increasing accuracy against the danger of introducing distortion is therefore neither arbitrary nor inconsistent. Remand Results at 18. Accordingly, the Department's decision to disaggregate Thantawan's reported selling expenses based on the ratio derived from TPBI's direct to indirect expenses to calculate a CV for Landblue is affirmed.

C. Profit

Finally, the Department's remand determination declined to reopen its choice of an appropriate surrogate amount for Landblue's profit. Nothing in the TPBI Remand Order required it to do so. Rather that remand order specifically affirmed Commerce's determination on this issue.

CONCLUSION

For the foregoing reasons, the Department's determinations in response to the remand are affirmed. Judgment shall be entered accordingly.