Navigator Co., S.A. v. United States

463 F.Supp.3d 1302

The NAVIGATOR COMPANY, S.A., Plaintiff,

Packaging Corporation of America, et al., Consolidated Plaintiffs,

and

Domtar Corporation, Plaintiff-Intervenor,

v.UNITED STATES, Defendant,andPackaging Corporation of America, et al., Defendant-Intervenors.

Slip Op. 20-94

Consol. Court No. 18-00192

United States Court of International Trade.

July 7, 2020

Jonathan M. Zielinski, Thomas M. Beline, and James E. Ransdell, Cassidy Levy Kent (USA) LLP, of Washington, DC, for Plaintiff/Defendant-Intervenor The Navigator Company, S.A.

Geert De Prest and William A. Fennell, Schagrin Associates, of Washington, DC, for Plaintiff/Defendant-Intervenor Packaging Corporation of America, et al.

Stephen J. Orava and Daniel L. Schneiderman, King & Spalding LLP, of Washington, DC, for Plaintiff-Intervenor Domtar Corporation.

Michael D. Snyder, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant United States. With him on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant Director. Of counsel on the brief was Mykhaylo A. Gryzlov, Senior Counsel, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

OPINION

Barnett, Judge:

This matter is before the court following the U.S. Department of Commerce's ("Commerce" or "the agency") redetermination upon court-ordered remand. See Final Results of Remand Redetermination, ECF No. 97 ("Remand Results"). Commerce issued its Remand Results in response to the court's disposition of separate challenges to the final results and amended final results of the first administrative review of the antidumping duty order on certain uncoated paper from Portugal.¹ See The Navigator Co., S.A. v. United States , 43 CIT ––––, 415 F. Supp. 3d 1278 (2019) ;² Certain Uncoated Paper From Portugal , 83 Fed. Reg. 39,982 (Dep't Commerce Aug. 13, 2018) (final results of antidumping duty admin. review; 2015–2017) (" Final Results "), ECF No. 33-2, and accompanying Issues and Decision Mem., A-471-807 (Aug. 6, 2018) ("I & D Mem."), ECF No. 33-3; Certain Uncoated Paper From Portugal , 83 Fed. Reg. 52,810 (Dep't Commerce Oct. 18, 2018) ( [am.] final results of antidumping duty admin. review; 2015–2017) ("Amended Final Results "), ECF No. 33-1, and accompanying Confidential Ministerial Error Mem. (Oct. 9, 2018), ECF No. 65-1.

Consolidated Plaintiffs and Plaintiff-Intervenor (collectively, "Petitioners")³ challenged Commerce's Amended Final Results as making a substantive change to the Final Results rather than correcting a purely ministerial error. Confidential Mem. of Law in Supp. of Rule 56.2 Mot. of Consol. Pls. Packaging Corp. of America and USW and Pl.-Int. Domtar Corp. for J. on the Agency R., ECF No. 48. Plaintiff, The Navigator Company, S.A. ("Navigator"), asserted a contingent challenge to the Final Results , arguing that Commerce erred in using the facts otherwise available, with or without an adverse inference. The Navigator Co.’s Mot. for J. on the Agency R. ("Navigator's 56.2 Mot."), ECF No. 50.⁴

With respect to Petitioners’ challenge to the Amended Final Results , the court held that Commerce made an impermissible substantive modification when it amended the Final Results and did not, as the agency asserted, correct an inadvertent clerical error. Navigator , 415 F. Supp. 3d at 1286–88. With respect to Navigator's challenge to the Final Results , the court held that Commerce permissibly used the facts otherwise available, but the agency's decision to use an adverse inference in selecting from among the facts otherwise available (referred to as "adverse facts available" or "AFA") was unsupported by substantial evidence. Id. at 1290–92.

In the administrative proceeding underlying the Final Results , Commerce rejected Navigator's allocated U.S. brokerage and handling expenses (reported in the field USBROK2U) as anomalous while accepting Navigator's actual expenses (reported in the field USBROK2U). I & D Mem. at 6–8. Commerce further found that an adverse inference was merited because Navigator failed to demonstrate "that its allocation methodology ... [did] not cause inaccuracies or distortions." I & D Mem. at 8. Commerce selected the highest reported allocated U.S. brokerage and handling expense as partial AFA for Navigator's allocated expenses, which resulted in a weighted-average dumping margin of 37.34 percent. Id. ; see also Final Results , 83 Fed. Reg. at 39,983.

Upon review, the court held that "Commerce's stated basis for making an adverse inference was the very same basis that justified Commerce's use of the facts available—that Navigator failed to establish that its allocation was non-distortive." Navigator , 415 F. Supp. 3d at 1292. Thus, the court remanded the determination for Commerce to "either select a neutral value to use as facts available or provide an explanation addressing how Navigator failed to act to the best of its ability that is distinct from Commerce's basis for using facts available." Id.

On January 24, 2020, Commerce issued the draft results of redetermination to interested parties. Draft Results of Remand Redetermination (Jan. 24, 2020) ("Draft Results"), PRR 107, RPJA Tab 1. Therein, Commerce explained that it "selected a neutral facts available value for allocated brokerage expenses by calculating the weighted-average of all positive USBROK2U values reported for the [period of review ("POR") ]." Id. at 2; see also id. at 4 (explaining that Commerce adjusted the reported USBROK2U expenses by removing all zero and negative values). Petitioners submitted comments on the Draft Results in which they argued, inter alia , that Commerce should continue to apply an adverse inference instead of applying neutral facts available. Pet'rs’ Cmts. on the Draft Results of Redetermination Pursuant to Court Remand (Jan. 30, 2020) ("Pet'rs’ Draft Cmts.") at 1–7, CRR 5, PRR 3, CRJA Tab 3.

On February 19, 2020, Commerce issued its Remand Results and submitted them to the court. The Remand Results remained substantively the same as the Draft Results. See Remand Results at 5. Commerce's use of neutral facts available resulted in an amended weighted-average dumping margin of 1.63 percent for Navigator. Id.

Petitioners oppose the Remand Results. Confidential Remand Cmts. of [Consol. Pls.] and Pl.-Int. Domtar Corp. ("Pet'rs’ Opp'n Cmts."), ECF No. 100. Petitioners argue that Commerce's uniform substitution of the purportedly neutral allocated brokerage expense value, including its use for transactions for which the original value was higher than the neutral value, introduced distortions and was effectively non-neutral because it reduced Navigator's allocated brokerage expenses and, thus, Navigator's dumping margin. Id. at 3–4. For this reason, Petitioners argue that Commerce's Remand Results lack a "rational connection between the facts of record and the agency's characterization" of its determination as applying neutral facts available. Id. at 4 (citing Motor Vehicle Mfrs. Assn. of United States Inc. v. State Farm Mut. Automobile Ins. Co., 463 U.S. 29, 51–52, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983) ).

Defendant, United States ("the Government"), and Navigator support Commerce's Remand Results. Def.’s Resp. to Cmts. Regarding the Remand Redetermination ("Def.’s Reply Cmts."), ECF No. 102; The Navigator Co.’s Responsive Cmts. in Supp. of the Agency's Remand Determination ("Navigator's Reply Cmts."), ECF No. 103. The Government argues that Petitioners have failed to administratively exhaust their argument, which otherwise fails on its merits. Def.’s Reply Cmts. at 4–10. Navigator argues that Commerce's selection and application of neutral facts available is reasonable and supported by substantial evidence, whereas Petitioners’ proposed methodology is inherently adverse. Navigator's Reply Cmts. at 2–6.

For the reasons discussed below, the court sustains Commerce's Remand Results.

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),⁵ 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). "The results of a redetermination pursuant to court remand are also reviewed for compliance with the court's remand order." SolarWorld Ams., Inc. v. United States , 41 CIT ––––, ––––, 273 F. Supp. 3d 1314, 1317 (2017) (citation and internal quotation marks omitted).

DISCUSSION

Petitioners oppose Commerce's uniform application of its neutral facts available value for the allocated U.S. brokerage and handling expenses. Pet'rs’ Opp'n Cmts. at 3–4. The court first addresses whether Petitioners adequately exhausted this argument before the agency and then turns briefly to the merits.

I. Exhaustion of Administrative Remedies

A. Legal Framework

"[T]he Court of International Trade shall, where appropriate, require the exhaustion of administrative remedies." 28 U.S.C. § 2637(d). While exhaustion is not jurisdictional, Weishan Hongda Aquatic Food Co. v. United States , 917 F.3d 1353, 1363–64 (Fed. Cir. 2019), the statute "indicates a congressional intent that, absent a strong contrary reason, the [CIT] should insist that parties exhaust their remedies before the pertinent administrative agencies," id. at 1362 (quoting Boomerang Tube LLC v. United States , 856 F.3d 908, 912 (Fed. Cir. 2017) ) (alteration original) (emphasis added). Failure to present an argument on remand generally precludes parties from raising that argument before the court. Mittal Steel Point Lisas Ltd. v. United States , 548 F.3d 1375, 1383–84 (Fed. Cir. 2008). There are exceptions to the exhaustion requirement, such as when "the party had no opportunity to raise the issue before the agency." Essar Steel, Ltd. v. United States , 753...