Carbon Activated Tianjin Co. v. United States

633 F.Supp.3d 1329

CARBON ACTIVATED TIANJIN CO., LTD., et al., Plaintiffs, v. UNITED STATES, Defendant,andCalgon Carbon Corporation and Cabot Norit Americas, Inc., Defendant-Intervenors.

Slip Op. 23-66 Court No. 21-00131

United States Court of International Trade

April 28, 2023

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

Antonia R. Soares, 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, Principal Deputy 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 & Compliance, U.S. Department of Commerce, of Washington, DC.

John M. Herrmann, R. Alan Luberda, Melissa M. Brewer, and Julia A. Kuelzow, Kelley Drye & Warren LLP, of Washington DC, for Defendant Intervenors Calgon Carbon Corporation and Cabot Norit Americas, Inc.

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 Ct. Remand ("Remand Results"), ECF No. 50-1. Plaintiffs¹ (referred to in the administrative proceeding as "Respondents") commenced this case challenging aspects of Commerce's final results in the twelfth administrative review ("AR12") of the antidumping duty order on certain activated carbon from the People's Republic of China ("China") for the period of review 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 duty 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. 32-2.² Plaintiffs challenged 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 Carbon Activated Tianjin Co. v. United States ("Carbon Activated I"), 46 CIT —, —, 586 F. Supp. 3d 1360, 1364 (2022).³

In Carbon Activated I, the court sustained in part and remanded in part the Final Results. Id. at 1381-82. The court remanded the Final Results to Commerce for reconsideration or further explanation of its selection of the surrogate value for carbonized materials and its selection of financial statements for determining surrogate financial ratios. Id. at 1382. On November 17, 2022, Commerce filed its Remand Results. Therein, Commerce further explained its selection of a surrogate value for carbonized materials and selection of surrogate financial statements. See Remand Results at 3-12.

Plaintiffs filed comments opposing Commerce's selection of Malaysian import data under Harmonized System ("HS") subheading 4402.90.1000 as the surrogate value for carbonized materials and Commerce's calculation of surrogate financial ratios using the 2018 financial statements of the Malaysian company, Bravo Green Sdn. Bhd. ("Bravo Green"). See Pls.' Cmts. in Opp'n to Remand Redetermination ("Pls.' Opp'n Cmts."), ECF No. 54. Defendant United States ("the Government") and Defendant-Intervenors Calgon Carbon Corporation and Cabot Norit Americas, Inc. (together, "Calgon") filed comments in support of the Remand Results. See Def.'s Reply in Supp. of the Dep't of Commerce's Remand Redetermination ("Def.'s Supp. Cmts."), ECF No. 56; Def.-Ints.' Cmts. in Supp. of Remand Redetermination ("Calgon's Supp. Cmts."), ECF No. 55.

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)⁴ and 28 U.S.C. § 1581(c). 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

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. As discussed in Carbon Activated I, 586 F. Supp. 3d at 1365-67, 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 19 U.S.C. § 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).

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). Commerce, in selecting surrogate values, "generally selects, to the extent practicable, surrogate values that are publicly available, are product-specific, reflect a broad market average, and are contemporaneous with the period of review." Jiaxing II, 822 F.3d at 1293 (citing Qingdao Sea-Line Trading Co. v. United States, 766 F.3d 1378, 1386 (Fed. Cir. 2014)); see also 19 C.F.R. § 351.408(c)(1), (4). Commerce 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, 38 CIT 1404, 1412, 11 F. Supp. 3d 1326, 1332-33 (2014) (citations omitted), aff'd, Jiaxing II, 822 F.3d 1289.

II. Surrogate Value for Carbonized Materials

a. Background

For the Final Results, Commerce valued coal-based carbonized material using Malaysian import data under HS 4402.90.1000, which covers "coconut shell charcoal." I&D Mem. at 43. Commerce selected coconut shell charcoal after finding that Respondents' proposed surrogate, HS 4402.90, which covers "wood charcoal (including shell or nut charcoal), excluding that of bamboo," was not an appropriate surrogate. Id. Commerce explained that HS 4402.90, a basket category inclusive of both coconut shell charcoal and HS 4402.90.9000, covering "other wood charcoal," was not the best information available on the record to value carbonized material because "there [was] no evidence on the record indicating that [Respondents] produced subject merchandise from wood, nuts, or any other non-coal charcoal." Id.

In Carbon Activated I, the court remanded Commerce's selection because the record lacked evidence that Respondents used coconut shell charcoal in the manufacture of the subject merchandise and, thus, the agency's selection between two imperfect datasets was unsupported by substantial evidence. 586 F. Supp. 3d at 1379.

In the draft redetermination, Commerce valued carbonized materials using Malaysian imports under HS 4402.90, finding that the record contained no evidence that Respondents purchased or used coconut shell charcoal to produce activated carbon exported to the United States, and that the record did not demonstrate whether coconut shell charcoal or wood charcoal was more similar to coal-based carbonized material. Draft Results of Redetermination Pursuant to Ct. Remand (Sept. 29, 2022) at 3-5, PRR 1, CRJA Tab 1.

Commerce reversed course in the Remand Results, selecting HS 4402.90.1000 as the best available information to value coal-based carbonized material, as it had for the Final Results. Remand Results at 3, 14. Commerce explained that, in this administrative review, there was no evidence that wood-based carbonized materials had been used to produce activated carbon; however, historically, coconut shell charcoal had been used to manufacture activated carbon. Id. at 5. Commerce further explained that coconut shell charcoal shares similarities with coal-based carbonized material. Id. Commerce also noted that Respondents produced only steam activated carbon whereas wood charcoal is usually used to produce activated carbon through chemical activation. Id. at 6-7.

b. Parties' Contentions

Plaintiffs contend that Commerce's selection of coconut shell charcoal to value carbonized material is unsupported by substantial evidence. Pls.' Opp'n Cmts. at 1-5. Plaintiffs argue that the record does not support Commerce's finding that coconut shell charcoal has been used to produce activated carbon. See id. at 2-3. Plaintiffs argue there was no evidence demonstrating that coconut shell charcoal was more comparable to coal-based carbonized material than wood charcoal, id. at 3, and that precedent compels Commerce to select HS 4402.90 as the surrogate value, id. at 4-5. Plaintiffs also contend that wood charcoal can be used to manufacture activated carbon through steam activation. Id. at 5.⁶

Defendant contends that substantial evidence supports Commerce's selection of coconut shell charcoal as the surrogate value for carbonized material. See Def.'s Supp. Cmts. at 3-7. Defendant argues that because Respondents only reported the production of steam activated carbon, and because chemically activated carbon is generally made using wood, wood-based carbonized material was not the best information to use as a surrogate value. Id. at 4-6.

Calgon contends that the underlying record and Commerce's findings in prior reviews support Commerce's determination that coconut shell charcoal shares many similarities with coal-based carbonized material and is therefore an appropriate surrogate value. See Calgon's Supp. Cmts. at 2-7.

c. Analysis

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