Carbon Activated Tianjin Co. v. United States

547 F.Supp.3d 1310

CARBON ACTIVATED TIANJIN CO., LTD., Carbon Activated Corporation, and Datong Juqiang Activated Carbon Co., Ltd., Plaintiffs,andBeijing Pacific Activated Carbon Products Co., Ltd., Ningxia Guanghua Cherishmet Activated Carbon Co., Ltd., Ningxia Mineral & Chemical Limited, and Shanxi Sincere Industrial Co., Ltd., Plaintiff-Intervenors,

v. UNITED STATES, Defendant,andCalgon Carbon Corporation and Cabot Norit Americas, Inc., Defendant-Intervenors.

Slip Op. 21-149

Court No. 20-00007

United States Court of International Trade.

October 22, 2021

Francis J. Sailer, Dharmendra N. Choudhary and Jordan C. Kahn, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of Washington, D.C., for Plaintiffs and Plaintiff-Intervenors.

Mollie L. Finnan, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for Defendant. With her on the brief were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Ashlande Gelin, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, D.C.

John M. Herrmann, R. Alan Luberda, and Melissa M. Brewer, Kelley Drye & Warren LLP, of Washington, D.C., for Defendant-Intervenors.

OPINION

Barnett, Chief Judge:

This matter is before the court following the U.S. Department of Commerce's ("Commerce" or "the agency") redetermination upon remand in this case. See Final Results of Redetermination Pursuant to Court Remand ("Remand Results"), ECF No. 68-1.¹

Plaintiffs and Plaintiff-Intervenors (collectively, "Plaintiffs")² commenced this case challenging several aspects of Commerce's final results in the eleventh administrative review ("AR11") of the antidumping duty order on certain activated carbon from the People's Republic of China ("China") for the period of review ("POR") April 1, 2017, through March 31, 2018. See Certain Activated Carbon From the People's Republic of China , 84 Fed. Reg. 68,881 (Dep't Commerce Dec. 17, 2019) (final results of antidumping duty admin. review; 2017–2018) (" Final Results "), ECF No. 39-2, and accompanying Issues and Decision Mem., A-570-904 (Dec. 11, 2019) ("I&D Mem."), ECF No. 39-3. Plaintiffs challenged Commerce's (1) selection of Malaysia instead of Romania as the primary surrogate country; (2) selection of surrogate values for Carbon Activated and DJAC's inputs of bituminous coal and coal tar pitch; and (3) calculation of surrogate financial ratios. See, e.g. , [Corrected] Confidential Mem. of Law in Supp. of Pls.’ and Pl.-Ints.’ Mot. For J. on the Agency R. Pursuant to USCIT Rule 56.3, ECF No. 59.

On April 2, 2021, the court remanded Commerce's selection of Malaysia as the primary surrogate country and Commerce's selection of surrogate data to value bituminous coal, sustained Commerce's selection of surrogate data to value coal tar pitch, and directed Commerce to reconsider the adjustments to the surrogate financial statements on remand. See Carbon Activated Tianjin Co. v. United States ("Carbon Activated I "), 45 CIT ––––, ––––, 503 F. Supp. 3d 1278 (2021).³

On June 30, 2021, Commerce filed its Remand Results. Therein, Commerce retained Malaysia as the primary surrogate country, reconsidered its valuation of bituminous coal, and further explained its adjustments to the financial ratios. See Remand Results at 2–19, 21–42.

Plaintiffs filed comments opposing the Remand Results. See Confidential Pls.’ Comments in Opp'n to Remand Redetermination ("Pls. Opp'n Cmts."), ECF No. 70. Defendant United States ("the Government") filed comments in support of the Remand Results. See Def.’s Resp. to Pls.’ Comments on Commerce's Remand Redetermination, ECF No. 73 ("Def.’s Reply Cmts."). Defendant-Intervenors Calgon Carbon Corporation and Cabot Norit Americas, Inc. filed a letter expressing support for the Remand Results without further comment. Letter from John M. Hermann to the Court (Aug. 30, 2021), ECF No. 72.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2018) and 28 U.S.C. § 1581(c) (2018).⁴ The court will uphold an agency determination that is supported by substantial evidence and otherwise in accordance with law. 19 U.S.C § 1516a(b)(1)(B)(i).

DISCUSSION

I. Legal Framework for Surrogate Country and Surrogate Value Selection

An antidumping duty is "the amount by which the normal value exceeds the export price (or the constructed export price) for the merchandise." 19 U.S.C. § 1673. When an antidumping duty proceeding involves a nonmarket economy country, Commerce determines normal value by valuing the factors of production⁵ in a surrogate country, see id. § 1677b(c)(1), and those values are referred to as "surrogate values." In selecting surrogate values, Commerce must, "to the extent possible," use "the best available information" from a market economy country or countries that are economically comparable to the nonmarket economy country and are "significant producers of comparable merchandise." Id. § 1677b(c)(1), (4).

In selecting a primary surrogate country, Commerce has adopted a four-step approach:

(1) the Office of Policy ("OP") assembles a list of potential surrogate countries that are at a comparable level of economic development to the [non-market economy] country; (2) Commerce identifies countries from the list with producers of comparable merchandise; (3) Commerce determines whether any of the countries which produce comparable merchandise are significant producers of that comparable merchandise; and (4) if more than one country satisfies steps (1)-(3), Commerce will select the country with the best factors data.

Jiaxing Brother Fastener Co. v. United States , 822 F.3d 1289, 1293 (Fed. Cir. 2016) ; see also Import Admin., U.S. Dep't of Commerce, Non-Market Economy Surrogate Country Selection Process, Policy Bulletin 04.1 (2004), https://enforcement.trade.gov/policy/bull04-1.html (last visited Oct. 22, 2021).

Commerce generally values all factors of production in a single surrogate country, referred to as the "primary surrogate country." See 19 C.F.R. § 351.408(c)(2) (excepting labor). But see Antidumping Methodologies in Proceedings Involving Non-Market Economies: Valuing the Factor of Production: Labor , 76 Fed. Reg. 36,092, 36,093 –94 (Dep't Commerce June 21, 2011) (expressing a preference to value labor based on industry-specific labor rates from the primary surrogate country). Commerce prefers surrogate values that are "input-specific, representative of a broad-market average, publicly available, contemporaneous with the POR, and tax- and duty-exclusive." Remand Results at 25 & n.105 (citation omitted); see also 19 C.F.R. § 351.408(c)(1), (4) (directing Commerce to select "publicly available"/"non-proprietary information" to value factors of production and "manufacturing overhead, general expenses, and profit"). Commerce has broad discretion to determine what constitutes "the best available information" for the selection of surrogate values. QVD Food Co. v. United States , 658 F.3d 1318, 1323 (Fed. Cir. 2011).

II. Bituminous Coal Surrogate Value Selection

For the Final Results , Commerce valued all bituminous coal using Romanian import data under the Harmonized System ("HS") heading 2701.12 (Bituminous Coal, Not Agglomerated) after finding that the average unit value of Malaysian imports under HS 2701.12 was unreliable. I&D Mem. at 13–16. The court remanded the issue to Commerce for further explanation as to the applicability of Chapter 27, Subheading Note 2 ("Note 2")⁶ to Commerce's selection of a surrogate value. Carbon Activated I , 503 F. Supp. 3d at 1290–91. On remand, Commerce determined that Note 2 applied to Malaysian HS data and chose different data sets to value bituminous coal depending on whether the calorific value of the bituminous coal was known to be below 5,833 kcal/kg. See Remand Results at 3–7.⁷ Commerce continued to rely on Romanian import data under HS 2701.12 to value bituminous coal that was not documented as having a calorific value below 5,833 kcal/kg but determined to use Malaysian import data under HS 2701.19 (Other Coal) to value bituminous coal with a known calorific value below 5,833 kcal/kg in light of its determination that Note 2 applied to the Malaysian import data. Id. at 7–8

A. Bituminous Coal Having Unknown Calorific Value

In its Draft Remand Results, Commerce determined that bituminous coal used by two of Carbon Activated's suppliers—Supplier C and an uncooperative supplier⁸ —should be valued using Romanian import data reported under HS 2701.12 because Commerce lacked record evidence demonstrating that such bituminous coal had a calorific value of less than 5,833 kcal/kg as required for valuation under HS 2701.19. Draft Results of Redetermination Pursuant to Court Remand ("Draft Remand Results") at 7, PRR 1, CRJA Tab 11.

For the Remand Results, Commerce further explained that "the plain language description of ... HS 2701.12 ... matche[d] the mandatory respondents’ description of their input (i.e., bituminous coal)." Remand Results at 28. Furthermore, without record evidence demonstrating that the coal input the mandatory respondents identified as "bituminous coal" was actually the "kind and grade more appropriately classified under HS 2701.19" (i.e., coal with a calorific value limit of less than 5,833 kcal/kg), Commerce stated that it could not consider that coal to fall under HS 2701.19. Id.

In their comments on the Draft Remand Results, Plaintiffs argued that Commerce never asked Supplier C to provide test reports documenting the calorific value of its inputs. See id. at 22, 26. Commerce explained that although it did not specifically ask "Supplier C to provide test results for its bituminous coal input, [it] asked Supplier C to ‘provide a detailed description of "smoke...