Comercio v. United States

FISCHER S.A. COMERCIO,INDUSTRIA AND AGRICULTURA and CITROSUCO NORTH AMERICA, INC., Plaintiffs, v. UNITED STATES, Defendant, and FLORIDA CITRUS MUTUAL andCITRUS WORLD, INC., Defendant-Intervenors.

Slip Op. 14-58

UNITED STATES COURT OF INTERNATIONAL TRADE

Dated: May 27, 2014

Before: Richard W. Goldberg, Senior Judge

Court No. 12-00340

PUBLIC VERSION

OPINION

[Final results of an administrative review of the antidumping duty order on certain orange juice from Brazil sustained.]

Robert G. Kalik and Chelsea S. Severson, Kalik Lewin, of Bethesda, MD, for plaintiffs.

Joshua E. Kurland, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, 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 Mykhaylo Gryzlov, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Matthew T. McGrath and Stephen W. Brophy, Barnes, Richardson & Colburn, of Washington, DC, for defendant-intervenors.

Goldberg, Senior Judge:

Plaintiffs Fischer S.A. Comercio, Industria and Agricultura and Citrosuco North America, Inc. (collectively, "Fischer") contest the final results of the U.S. Department of Commerce's ("Commerce" or the "Department") fifth administrative review ofthe antidumping duty order on certain orange juice from Brazil. See Certain Orange Juice from Brazil, 77 Fed. Reg. 63,291 (Dep't Commerce Oct. 16, 2012) (final admin. review) ("Final Results"). In particular, Fischer disputes (1) Commerce's calculation of Fischer's financial expense ratio to include unrealized hedging results and to exclude long-term interest income and (2) Commerce's calculation of Fischer's international freight expenses to include a portion of a bunker fuel surcharge from a third-party shipping contract. For reasons discussed below, the court denies Fischer's motion and sustains the Final Results.

BACKGROUND

In April 2011, the Department initiated its fifth and final administrative review of the antidumping duty order on certain orange juice from Brazil. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 76 Fed. Reg. 23,545, 23,546 (Dep't Commerce Apr. 27, 2011). The review covered the period from March 1, 2010 to February 28, 2011. Id. Fischer, a Brazilian producer and exporter of orange juice concentrate, participated in the review and provided information regarding its business operations, home market sales, U.S. sales, cost of production, and constructed normal value. See Pls.' Mot. for J. on Agency R., ECF No. 26 ("Pls.' Br."), at 3-4. Most relevant here, Fischer submitted a financial expense ratio worksheet and information pertaining to a bunker fuel adjustment that Fischer's U.S. customers paid. Id.

Commerce preliminarily calculated a dumping margin of 8.73% for Fischer. Certain Orange Juice from Brazil, 77 Fed. Reg. 21,724, 21,733 (Dep't Commerce Apr. 11, 2012) (prelim. admin. review) ("Prelim. Results"). Because Commerce determined that all of Fischer's home market sales were below cost, Commerce based normal value on a constructed value. Id. at 21,730. Further, because Fischer sold subject merchandise exclusively to a U.S. affiliateduring the period of review, Commerce used a constructed export price when calculating Fischer's dumping margin. Id. at 21,727.

In administrative case briefing, Fischer contested certain portions of Commerce's constructed value and constructed export price calculations. See generally Fischer Case Br., PD II 113-16 (May 11, 2012), ECF No. 19 (Dec. 5, 2012) ("Fischer Admin. Case Br."). With regard to constructed value, Fischer cited two alleged flaws in Commerce's computation of Fischer's financial expense ratio. First, Fischer averred that Commerce's decision to include unrealized hedging losses in Fischer's financial expense ratio was both contrary to statute and contrary to Commerce's prior practice. Id. at 6-8. Second, Fischer challenged Commerce's refusal to offset the company's long-term interest expenses with long-term interest revenue. Id. at 8-9. Both of these purported errors had the effect of inflating Fischer's net financial expenses and the resulting financial expense ratio.

Fischer lastly objected to Commerce's method for calculating international freight expenses, which are deducted from the constructed export price. Id. at 2-5. Because Fischer shipped most subject merchandise through an affiliated shipper during the review period, Commerce determined that those shipping rates did not reflect arms-length transactions. Prelim. Results, 77 Fed. Reg. at 21,728. To restate Fischer's shipping expenses on an arms-length basis, Commerce relied on invoices containing the rate that Fischer's affiliated shipper charged to an unaffiliated party. Id. The invoice upon which Commerce based its calculations contained two charges—an international freight rate and a separate bunker fuel surcharge.¹ See Fischer Admin. Case Br. 2-3. In its case brief, Fischer challenged Commerce's inclusion of bunker fuelsurcharges, averring that Fischer always received reimbursement from its U.S. customers for the bunker fuel surcharge. See id. at 3.

Commerce rejected Fischer's arguments and retained its preliminary findings in the Final Results. Commerce's findings with regard to unrealized hedging results and long-term interest revenue in particular represented a departure from previous review proceedings.

SUBJECT MATTER JURISDICTION AND STANDARD OF REVIEW

This Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006) and must "hold unlawful any determination, finding, or conclusion found . . . to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i). When reviewing factual determinations for substantial evidence, the Court considers the entire record, including any facts that "fairly detract[] from" the agency's conclusion. Huaiyin Foreign Trade Corp. v. United States, 322 F.3d 1369, 1374 (Fed. Cir. 2003) (quoting Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed. Cir. 1984)). A decision is supported by substantial evidence if a reasonable mind might accept the evidence "as adequate to support a conclusion," regardless of whether the Court would have reached the same conclusion. See Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938).

The Court applies the analysis outlined in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984), to assess whether Commerce's statutory construction is in accordance with law. Under the Chevron rubric, the Court first assesses "whether Congress has directly spoken to the precise question at issue." Id. at 842. If it has, then the Court must give effect to Congress's unambiguously expressed intent. Id. at 842-43. However, if the statute is silent or ambiguous with respect to the pertinent issue, the Court defers to an agency's reasonable construction of a statute it is entrusted to administer. See id. at 843.Commerce's construction of antidumping laws in particular is entitled to "substantial deference." Torrington Co. v. United States, 68 F.3d 1347, 1351 (Fed. Cir. 1995).

Finally, the Court's standard of review "precludes arbitrariness in the application of antidumping laws." Thai Plastic Bags Indus. Co. v. United States, 37 CIT __, __, 949 F. Supp. 2d 1298, 1302 (2013). Thus, when Commerce "act[s] differently . . . than it has consistently acted in similar circumstances without reasonable explanation," the Court must find Commerce's actions arbitrary. Consol. Bearings Co. v. United States, 348 F.3d 997, 1007 (Fed. Cir. 2003).

DISCUSSION

I. Legal framework

A dumping margin is "the amount by which the normal value exceeds the export price or constructed export price of the subject merchandise." 19 U.S.C. § 1677(35)(A). Antidumping law requires that Commerce construct a normal value when, as here, all home market sales were made at less than the cost of production. Id. § 1677b(b)(1). Constructed value is calculated using a statutory formula that includes the cost of manufacturing, "the actual amounts incurred and realized" for selling, general, and administrative expenses ("SG&A"), and an amount for profits. Id. § 1677b(e). As part of its analysis, Commerce calculates a financial expense ratio where the "numerator . . . is the respondent's full-year net financial expenses" and the denominator is the "respondent's full-year cost of goods sold." See Union Steel Mfg. Co. v. United States, 36 CIT __, __, 837 F. Supp. 2d 1307, 1313-14 n.2 (2012).

19 U.S.C. § 1677b(f)(1)(A) instructs Commerce to normally calculate costs "based on the records of the exporter or producer of the merchandise, if such records are kept in accordance with the generally accepted accounting principles ["GAAP"] of the exporting country . . . and reasonably reflect the costs associated with the production and sale of the merchandise."Commerce typically obtains the information needed to calculate a financial expense ratio from a company's audited financial statements for the period most closely corresponding to the period of review. See, e.g., Fischer S.A. Comercio, Industria and Agricultura v. United States, Slip Op. 12-59, 2012 WL 1942109, at *4 (CIT Apr. 30, 2012).

Antidumping law also requires that Commerce use a constructed export price when a producer or exporter sells to an affiliated U.S. buyer. See 19 U.S.C. § 1677a(b). From that price, Commerce deducts "the amount, if any, included in such price, attributable to any additional costs, charges, or expenses . . . incident to bringing the subject merchandise from the original place of shipment in the exporting country to the place of delivery in the United States." Id. § 1677a(c)(2)(A). When a producer or exporter ships through an affiliated company, Commerce often calculates freight expenses using...