Carbon Activated Tianjin Co. v. United States

586 F.Supp.3d 1360

CARBON ACTIVATED TIANJIN CO., LTD., Carbon Activated Corporation, Datong Juqiang Activated Carbon Co., Ltd., Shanxi Industry Technology Trading Co., Ltd., Datong Municipal Yunguang Activated Carbon Co., Ltd. and Beijing Pacific Activated Carbon Products Co., Ltd., Plaintiffs,

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

Slip Op. 22-89

Court No. 21-00131

United States Court of International Trade.

August 8, 2022

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

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

John M. Herrmann, R. Alan Luberda, and Melissa M. Brewer, Kelley Drye & Warren LLP, for Defendant-Intervenors Calgon Carbon Corporation and Cabot Norit Americas, Inc.

OPINION AND ORDER

Barnett, Chief Judge:

This matter is before the court following the U.S. Department of Commerce's ("Commerce" or "the agency") final results in the twelfth administrative review ("AR12") of the antidumping duty ("ADD") order on certain activated carbon from the People's Republic of China ("China") for the period of review ("POR") April 1, 2018, through March 31, 2019. See Certain Activated Carbon From the People's Republic of China , 86 Fed. Reg. 10,539 (Dep't Commerce Feb. 22, 2021) (final results of antidumping admin. review, final determination of no shipments, and final rescission of admin. review, in part; 2018–2019) (" Final Results "), ECF No. 32-3, and accompanying Issues and Decision Mem., A-570-904 (Feb. 12, 2021) ("I&D Mem."), ECF No. 32-2.¹

Plaintiffs Carbon Activated Tianjin Co., Ltd., Carbon Activated Corporation, Datong Juqiang Activated Carbon Co., Ltd., Shanxi Sincere Industrial Co., Ltd., Datong Municipal Yunguang Activated Carbon Co., Ltd., and Beijing Pacific Activated Carbon Products Co., Ltd. (collectively, "Plaintiffs" or, in the administrative proceeding, "Respondents"), challenge Commerce's selection of surrogate values for bituminous coal, anthracite coal, hydrochloric acid, carbonized materials, caustic soda, and steam, along with the selection of surrogate financial ratios. See Confidential Pls.’ Mot. for J. on the Agency R. Pursuant to Rule 56.2, and accompanying Mem. of Law in Supp. of Pls.’ Mot. for J. on the Agency R. Pursuant to USCIT Rule 56.2 ("MJAR"), ECF No. 36; Confidential Pls.’ Reply to Def. and Def.-Int.’s Resps. to Pls.’ Rule 56.2 Mot. for J. on the Agency R. ("Pls.’ Reply"), ECF No. 41.

Defendant United States ("the Government") and Defendant-Intervenors Calgon Carbon Corporation and Cabot Norit Americas, Inc. (together, "Calgon" or, in the administrative proceeding, "Petitioners") filed response briefs in support of Commerce's determinations—with Calgon focused solely on the valuation of hydrochloric acid. See Def.’s Resp. to Pls.’ Mot. for J. on the Agency R. ("Def.’s Resp."), ECF No. 38; Confidential Def.-Ints.’ Resp. in Opp'n to Pls.’ Mot. for J. on the Agency R. ("Def.-Ints.’ Resp."), ECF No. 39.

For the reasons discussed herein, the court sustains in part and remands in part the Final Results .

BACKGROUND

I. Proceedings Before Commerce

In June 2019, Commerce initiated AR12 of the ADD order on activated carbon from China. Initiation of Antidumping and Countervailing Duty Administrative Reviews , 84 Fed. Reg. 27,587, 27,589 –90 (Dep't Commerce June 13, 2019), PR 151, CJA Tab 13. In July 2019, Commerce selected Carbon Activated Tianjin Co., Ltd. ("Carbon Activated") and Datong Juqiang Activated Carbon Co., Ltd. ("DJAC") as mandatory respondents. Selection of Respondents for Individual Review (July 1, 2019) at 1, PR 23, CJA Tab 1. Carbon Activated and DJAC responded to the Department's ADD questionnaires by reporting their factors of production² and provided surrogate value information as well as information rebutting the surrogate value information provided by Petitioners. See Certain Activated Carbon From the People's Republic of China, 85 Fed. Reg. 23,947 (Dep't Commerce Apr. 30, 2020) (prelim. results of antidumping duty admin. review, intent to rescind the review in part, and prelim. determination of no shipments; 2018–2019) (" Preliminary Results "), PR 271, CJA Tab 28, and accompanying Decision Mem. for the Prelim. Results at 2, A-570-904 (Apr. 24, 2020) ("Prelim. Mem."), PR 259, CJA Tab 26 (describing questionnaire process).

Because Commerce considers China to be a nonmarket-economy country for the purposes of the unfair trade laws, the agency determines normal value by valuing the factors of production used in producing the subject merchandise, general expenses, profit, and "the cost of containers, coverings, and other expenses" in a surrogate market economy country. 19 U.S.C. § 1677b(c)(1) (2018).³ In selecting these "surrogate values," Commerce must, "to the extent possible," use data from a market economy country that is at "a level of economic development comparable to that of the nonmarket economy country" and is a "significant producer[ ] of comparable merchandise." Id. § 1677b(c)(4).

In the underlying proceeding, Commerce identified six potential surrogate countries: Brazil, Bulgaria, Malaysia, Mexico, Russia, and Turkey. Request for Cmts. Re: (1) Economic Development, (2) Surrogate Country and (3) Surrogate Value Information (Sept. 20, 2019), Attach. at 2, PR 104, CJA Tab 6. Respondents and Petitioners submitted comments regarding the surrogate country selection process; Petitioners supported the choice of Malaysia or Mexico as the primary surrogate country, while Respondents advocated for the use of Mexico, Russia, or Brazil. Pet'rs’ Cmts. on Surrogate Country Selection at 6, PR 115, CJA Tab 8; Pet'rs’ Submission of Surrogate Values at 2, PR 121–22, CJA Tab 10.

On April 30, 2020, Commerce published the preliminary results of AR12. Preliminary Results. Therein, Commerce selected Malaysia as the primary surrogate country. Prelim. Mem. at 17.

After addressing challenges to the preliminary calculations by Respondents and responses by Petitioners, Commerce finalized its ADD rates at $1.83/kilogram ("kg") for Carbon Activated, $0.38/kg for DJAC, and $0.65/kg for the non-examined separate rate respondents. Final Results , 86 Fed. Reg. at 10,540. Commerce continued to rely on Malaysia as the primary surrogate country for the valuation of all material inputs. See, e.g. , I&D Mem. at 28 (identifying Malaysia as the primary surrogate country in the context of Commerce's valuation of anthracite coal). The agency selected Malaysian company Bravo Green Sdn. Bhd.’s ("Bravo Green") 2018 financial statements to use for calculating financial ratios. Id. at 34.

Plaintiffs subsequently challenged the Final Results before this court. See Compl., ECF No. 12. In particular, Plaintiffs challenge Commerce's surrogate value selections for (1) bituminous coal; (2) anthracite coal; (3) hydrochloric acid; (4) caustic soda; (5) steam; (6) coal-based carbonized materials; and (7) financial ratios. See MJAR at 1–3.

II. Legal Framework for Surrogate Country and Surrogate Value Selection

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); Jiaxing Brother Fastener Co. v. United States ("Jiaxing II "), 822 F.3d 1289, 1294 & n.3 (Fed. Cir. 2016). 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 values from the primary surrogate country). The court has acknowledged this practice as a way "to minimize distortion." Tri Union Frozen Prods., Inc. v. United States , 41 CIT ––––, ––––, 227 F. Supp. 3d 1387, 1400 (2017) ; see also Carbon Activated Tianjin Co. v. United States , 45 CIT ––––, ––––, 547 F. Supp. 3d 1310, 1318 (2021) (also discussing Commerce's preference to value all factors of production in a single surrogate country).

To select 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 II , 822 F.3d at 1293 (explaining that the primary surrogate country is selected based on "the reliability and completeness of the data in the similarly-situated surrogate countries and [Commerce] generally selects the one with the best data as the primary surrogate country"); 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 August 8, 2022).

The agency will "only resort to a secondary surrogate country if data from the primary surrogate country are unavailable or unreliable." Jiaxing Brother Fastener Co. v. United States ("Jiaxing I "), 38 CIT 1404, 1412, 11 F. Supp. 3d 1326, 1332–33 (2014) (citations omitted), aff'd , Jiaxing II , 822 F.3d 1289.

As previously noted, in selecting surrogate...