Beijing Tianhai Indus. Co. v. United States, Slip Op. 17–79

234 F.Supp.3d 1322

BEIJING TIANHAI INDUSTRY CO., LTD., Plaintiff,

v. UNITED STATES, Defendant,andNorris Cylinder Company, Defendant–Intervenor.

Slip Op. 17–79

Court No. 12–00203

United States Court of International Trade.

July 05, 2017

Mark E. Pardo, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of Washington, DC, argued for plaintiff. With him on the brief were Andrew T. Schutz and Brandon M. Petelin.

Douglas G. Edelschick, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant. With him on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr. Assistant Director. Of counsel on the brief was Michael T. Gagain, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

Edward M. Lebow, Haynes and Boone, LLP, of Washington, DC, argued for defendant-intervenor. With him on the brief was Nora L. Whitehead.

Before: Richard K. Eaton, Judge

OPINION and ORDER

Eaton, Judge:

The United States Department of Commerce's ("Commerce" or the "Department") second results of redetermination pursuant to the court's remand order in Beijing Tianhai Industry Co. v. United States , 39 CIT ––––, 106 F.Supp.3d 1342 (2015) ("BTIC II ") and the parties' comments are before the court. See Final Results of Redetermination Pursuant to Court Remand (Dep't Commerce Feb. 8, 2016) ("Second Remand Results"); see also Pl.'s Cmts. Second Remand Results, ECF No. 108; Def.'s Resp. Pl.'s Cmts. Second Remand Results, ECF No. 112; Def.–Int.'s Resp. Pl.'s Cmts. Second Remand Results, ECF No. 113.

Also before the court is the Rule 54(b) motion of plaintiff Beijing Tianhai Industry Co. ("plaintiff" or "BTIC"), seeking to revise the court's interlocutory decision in Beijing Tianhai Industry Co. v. United States , 38 CIT ––––, 7 F.Supp.3d 1318 (2014) ("BTIC I ") in light of the United States Court of Appeals for the Federal Circuit's decision in Mid Continent Nail Corp. v. United States , 846 F.3d 1364 (Fed. Cir. 2017). See Pl.'s R. 54(b) Mot. Revise J., ECF No. 121 ("Pl.'s R. 54(b) Mot.").

Defendant the United States ("defendant" or "Government"), on behalf of Commerce, and defendant-intervenor Norris Cylinder Company ("defendant-intervenor" or "Norris") oppose the motion. See Def.'s Resp. Pl.'s R. 54(b) Mot., ECF No. 122 ("Def.'s R. 54(b) Resp."); Def.–Int.'s Resp. Pl.'s R. 54(b) Mot., ECF No. 123 ("Def.–Int.'s R. 54(b) Resp.").

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2012) and 19 U.S.C. § 1516a(a)(2)(B)(i) (2012). For the reasons that follow, the court grants plaintiff's Rule 54(b) motion and remands this matter to Commerce.

BACKGROUND

The pertinent background facts are set forth in the court's opinions in BTIC I and B TIC I I , and are supplemented here.

In May 2012, Commerce made its final affirmative less-than-fair-value determination on imports of high pressure steel cylinders from the People's Republic of China ("PRC"). See High Pressure Steel Cylinders From the PRC , 77 Fed. Reg. 26,739 (Dep't Commerce May 7, 2012) (final determination), and accompanying Issues and Decision Memorandum ("Issues & Dec. Mem.") (collectively, "Final Determination"). Commerce found that BTIC had engaged in targeted dumping by time period, i.e ., from October 1, 2010, through December 31, 2010, and assigned it a 6.62 percent margin. See Issues & Dec. Mem., Cmt. 4; see also High Pressure Steel Cylinders From the PRC , 77 Fed. Reg. 37,377 (Dep't Commerce June 21, 2012) (antidumping duty order).

To calculate BTIC's margin, Commerce used the average-to-transaction ("A–T") method¹ because it found that its normally used average-to-average ("A–A") method² "conceal[ed] differences in price patterns between the targeted and non-targeted groups by averaging low-priced sales to the targeted group with high-priced sales to the non-targeted group." Issues & Dec. Mem. at 24. Commerce applied the A–T method, with zeroing,³ not only to those sales that Commerce determined constituted a pattern of export prices that "differed significantly" among time periods, i.e ., 10 transactions representing 5.04 percent of the volume of BTIC's U.S. sales, but to all of BTIC's U.S. sales during the period of investigation, i.e ., October 1, 2010, to March 31, 2011 ("POI"). See Issues & Dec. Mem., Cmt. 4.

Plaintiff filed its motion for judgment on the agency record in April 2013. See Pl.'s Mem. Supp. Mot. J. Agency R., ECF No. 32 ("Pl.'s Mem."). Among the issues raised in plaintiff's opening brief was whether Commerce's practice of applying the A–T method to all of BTIC's U.S. sales, not just the "targeted dumped" sales, contravened the language and intent of the targeted dumping statute, 19 U.S.C. § 1677f–1(d)(1)(B) (2006). See Pl.'s Mem. 16–18.

Commerce's practice of applying the A–T method to all U.S. sales replaced Commerce's prior practice, embodied in 19 C.F.R. § 351.414(f)(2) (2007), known as the "Limiting Regulation." The Limiting Regulation provided, in pertinent part: "Where the criteria for identifying targeted dumping ... are satisfied, the Secretary normally will limit the application of the [A–T] method to those sales that constitute targeted dumping under [19 C.F.R. § 351.414(f)(1)(i) ]." 19 C.F.R. § 351.414(f)(2). That is, where (1) "there is targeted dumping in the form of a pattern of export prices ... for comparable merchandise that differ significantly among ... periods of time;" and (2) "[t]he Secretary determines that such differences cannot be taken into account using the [A–A] method or the [T–T] method and explains the basis for that determination," then Commerce "normally will limit the application of the [A–T] method to those sales that constitute targeted dumping ...." 19 C.F.R. § 351.414(f)(1)-(2). In 2008, Commerce attempted to withdraw its regulations governing targeted dumping cases, including 19 C.F.R. § 351.414(f), the provision that contains the Limiting Regulation. See Withdrawal of the Regulatory Provisions Governing Targeted Dumping in Antidumping Duty Investigations, 73 Fed. Reg. 74,930 (Dep't Commerce Dec. 10, 2008) ("Withdrawal Notice").

In its opening brief, plaintiff cited the Limiting Regulation—in particular the rationale underlying the regulation—as support for its argument that applying A–T to all of BTIC's U.S. sales was contrary to law:

In the preamble to [the Limiting Regulation], Commerce explained that it would be "unreasonable and totally punitive " to apply the targeted dumping remedy to all sales in situations in which only a minimal portion of the sales database was found to be targeted. Commerce further noted that application of the targeted dumping remedy would only be appropriate in situations "in which targeted dumping by a firm is so pervasive that the [A–T] method becomes the benchmark for gauging the fairness of that firm's pricing practices." Commerce's withdrawal of this regulation does not alter the fact that Commerce did provide a well reasoned and rational explanation as to why a targeted dumping remedy should be limited to the targeted sales to avoid unreasonable and unduly punitive results . Suspiciously absent from Commerce's justification for applying the targeted dumping [remedy] to 100% of BTIC's sales is any reasoned attempt to demonstrate that this approach is not unduly punitive in light of the insignificant portion of sales found to be targeted.

Pl.'s Mem. 22 (quoting Antidumping Duties; Countervailing Duties , 62 Fed. Reg. 27,296, 27,375 (Dep't Commerce May 19, 1997) (final rule)). In other words, BTIC cited the Department's own words to challenge the lawfulness of Commerce's practice of applying the A–T method to all U.S. sales, including non-targeted dumped sales, made during the POI on the grounds that it was punitive and unreasonable.

Meanwhile, the validity of Commerce's withdrawal of the Limiting Regulation under the Administrative Procedure Act ("APA") was the subject of litigation before this Court. See, e.g. , Gold East Paper (Jiangsu) Co. v. United States , 37 CIT ––––, 918 F.Supp.2d 1317 (2013) ; Mid Continent Nail Corp. v. United States , 38 CIT ––––, ––––, 999 F.Supp.2d 1307, 1321 (2014), aff'd 846 F.3d 1364 (Fed. Cir. 2017) ("Commerce violated its obligation to provide notice and opportunity for comment prior to the rescission of the [Limiting Regulation]."). The Court's opinion in Gold East Paper (Jiangsu) Co. v. United States was an interlocutory decision issued in June 2013—after BTIC's opening brief was filed in this case, but before the Government filed its response brief. In Gold East Paper , this Court held that Commerce's withdrawal of the Limiting Regulation violated the APA and was therefore invalid. See Gold East Paper , 37 CIT at ––––, 918 F.Supp.2d at 1327–28.⁴

On August 2, 2013, the Government filed its response to plaintiff's opening brief. The Government defended Commerce's application of the A–T method to all of BTIC's U.S. sales during the POI, and not solely the targeted dumped sales, arguing that Commerce's interpretation of the targeted dumping statute was in accordance with law. See Def.'s Resp. Pl.'s Mot. J. Agency R., ECF No. 43 ("Def.'s Resp.") 17 ("Commerce is the agency charged with administering the antidumping statute, and Commerce's interpretation of this statute as permitting the use of the [A–T] method to all of a respondent's sales is reasonable, consistent with the remedial purposes of the antidumping law, and entitled to Chevron deference. Accordingly, the Court should sustain Commerce's application of the [A–T] method to all of BTIC's sales as being in accordance with law."). In addition, in a footnote, defendant called the court's attention to Gold East Paper :

For the sake of completeness, we note that a recent interlocutory decision of this Court held that the regulation, 19 C.F.R. § 351.414(f)(2) (2007), was not properly withdrawn, [Gold East Paper ], but we

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