Nexco S.A. v. United States

687 F.Supp.3d 1296

NEXCO S.A., Plaintiff, v. UNITED STATES, Defendant,andAmerican Honey Producers Associationand Sioux Honey Association, Defendant-Intervenors.

Slip Op. 24-22 Court No. 22-00203

United States Court of International Trade

February 26, 2024

Julie C. Mendoza, Donald B. Cameron, R. Will Planert, Brady W. Mills, Mary S. Hodgins, Eugene Degnan, Jordan L. Fleischer, Nicholas C. Duffey and Stephen A. Morrison, Morris, Manning & Martin, LLP, of Washington, D.C., argued for plaintiff Nexco, S.A.

Kara M. Westercamp, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant United States. Also on the brief were Patricia M. McCarthy, Director, Reginald T. Blades, Jr., Assistant Director, and Brian M. Boynton, Principal Deputy Assistant Attorney General for defendant United States. Of Counsel was Savannah Maxwell, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

Melissa M. Brewer and R. Alan Luberda, Kelley Drye & Warren LLP, of Washington, D.C., for defendant-intervenors American Honey Producers Association and Sioux Honey Association.

OPINION

Kelly, Judge:

Before the Court is the U.S. Department of Commerce's ("Commerce") Final Results of Redetermination Pursuant to Court Remand, Oct. 13, 2023, ECF No. 49 ("Remand Results") in the 2020-2021 antidumping duty investigation in its 2020-2021 less-than-fair-value investigation of raw honey from Argentina. In Nexco S.A. v. United States ("Nexco I"), this Court remanded to Commerce to reconsider or further explain its decision: (1) to use Nexco, S.A.'s ("Nexco") acquisition costs as a proxy for the beekeepers' costs of production ("COP"); and (2) to compare Nexco's third-country sales and U.S. sales on a monthly basis. 639 F. Supp. 3d 1312, 1324-25 (Ct. Int'l Tr. 2023). On remand, Commerce continues to use Nexco's acquisition costs for the purposes of determining sales below COP, see Remand Results at 2, and continues to compare Nexco's U.S. prices with normal values based on Nexco's third-country sales prices on a monthly basis. Id. For the reasons that follow, the Court sustains Commerce's use of acquisition costs as a proxy for beekeepers' COP and its price comparison on a monthly basis.

BACKGROUND

The Court presumes familiarity with the facts of this case as set out in full in the previous opinion ordering remand to Commerce, see Nexco I, 639 F. Supp. 3d. at 1314-15, and here summarizes the facts relevant to its review of the Remand Results. On May 18, 2021, Commerce initiated an antidumping duty investigation of raw honey from Argentina. See Raw Honey from Argentina, Brazil, India, Ukraine, and the Socialist Republic of Vietnam, 86 Fed. Reg. 26,897 (Dep't Commerce May 18, 2021) (initiation of less-than-fair-value investigation). Nexco, a mandatory respondent, reported early on that it exports, rather than produces, raw honey which it purchases from numerous small suppliers. See Nexco's Request for Information Response, A-357-823, PD 89, bar 4135011-01 (June 17, 2021) ("Nexco RFI Resp.").

In its preliminary determination, Commerce found that the beekeepers, not Nexco, were the producers of honey, and issued questionnaires to two of Nexco's beekeepers and one middleman. See Decision Memo. for Prelim. Affirm. Determ. in the Less-Than-Fair-Value Investigation of Raw Honey from Argentina at 26, A-357-823, PD 365, bar 4183570-02 (Nov. 17, 2021) ("Prelim. Results"). Commerce determined that the beekeepers were not selling to Nexco below cost, and it would be reasonable to use Nexco's acquisition costs as a "proxy" for the beekeepers' COPs. Id. Commerce thus used Nexco's acquisition costs to calculate its COPs, in lieu of the costs of the beekeepers', for the purposes of the sales-below-cost test. Id. at 25-27. Commerce also found over 20 percent of Nexco's home market sales were below COP for certain products during the POI and excluded these sales pursuant to 19 U.S.C. § 1677b(b)(1). Id. at 28. Furthermore, Commerce determined that certain of Nexco's home market sales of foreign like product were less than five percent of its aggregate sales, and pursuant to 19 U.S.C. § 1677b(a)(1)(C), based normal value on Nexco's sales to Germany.¹ Id. at 22.

On April 14, 2022, Commerce issued its final determination. Commerce calculated a 9.17 percent dumping margin for Nexco,² and continued use of the COP methodology from the Preliminary Determination, again using Nexco's acquisition costs as a "reasonable proxy" for the beekeepers' COPs. See Raw Honey from Argentina: Final Determination of Sales at Less than Fair Value and Final Affirmative Determination of Critical Circumstances, 87 Fed. Reg. 22,179 (Dep't Commerce April 14, 2022) and accompanying issues and decision memo at 8-13 ("Final Decision Memo."). Commerce also applied its high inflation and alternative cost methodologies to Nexco's COPs. Final Decision Memo. at 15. Commerce found that the alternative costs methodology was appropriate because (1) there was more than 25 percent variance of Nexco's direct material costs during the period of investigation ("POI") in real, inflation-adjusted terms, and (2) Commerce found evidence of a linkage between Nexco's sales prices and material costs. Id. at 17; Prelim. Results at 24. Commerce employed its high inflation methodology because Argentina experienced more than 25 percent inflation during the POI. Final Decision Memo. at 17, 26; Prelim. Results at 20. Applying both methodologies, Commerce determined that more than 20 percent of Nexco's home market sales of certain products were made below cost. Prelim. Results at 28. Further determining that these sales did not provide for the recovery of costs during a reasonable period of time, Commerce excluded these sales from its normal value calculations. Id.

Nexco moved for judgment on the agency record, challenging Commerce's use of Nexco's acquisition costs as a proxy for the beekeepers' COP; Commerce's use of its alternative cost methodology, which used average production costs on a monthly rather than quarterly basis; and Commerce's determination to compare Nexco's third-country sales and U.S. sales on a monthly basis. See [Nexco's] Mot. J. Agency Rec. at 7-46, Nov. 18, 2022, ECF No. 25. This Court sustained Commerce's determination to compare Nexco's cost on a monthly basis for the purposes of sales below cost. Nexco I, 639 F. Supp. 3d at 1322. The Court remanded for further consideration or explanation Commerce's decision to use Nexco's acquisition costs as proxy for beekeepers' COP. Id. at 1316. In particular, the Court concluded that Commerce merely explained that the acquisition costs were not underinclusive but did not address, in light of record evidence, why they were not overinclusive. Id. at 1319. The Court also remanded for further consideration or explanation Commerce's determination that high inflation in Argentina justified its use of monthly comparisons of Nexco's sales with third country sales when the relevant sales were all made in U.S. dollars. Id. at 1324.

Commerce filed its Remand Results on October 13, 2023. In the Remand Results, Commerce persists that Nexco's acquisition costs are a reasonable proxy for calculating the beekeepers' COP. Remand Results at 6. Commerce also continues to justify a month-to-month comparison for its high inflation methodology because it is consistent with 19 C.F.R. § 351.414(d)(3) and Commerce's practice. Id. at 21-23. Commerce further rejects reliance on quarterly average prices because using quarterly averages "fails to account for the interrelationships of the margin calculations, the potential distortions addressed by high inflation, and the holistic approach of Commerce's high inflation methodology." Id. at 21.

On November 13, 2023, Nexco filed its comments on Commerce's Remand Results. [Nexco's] Cmts. on [Remand Results] at 27, Nov. 13, 2023, ECF No. 56 ("Nexco Cmts."). Nexco argues that the Remand Results fail to show that Nexco's acquisition prices are a reasonably proxy for the COP of raw honey and that Commerce's use of month-to-month averaging periods for Nexco's U.S. and third-country sales to Germany is unsupported. Id. at 2, 12. That same day, Defendant-Intervenors American Honey Producers Association and Sioux Honey Association ("Defendant-Intervenors") filed their comments supporting Commerce's redetermination, submitting that Commerce's explanations in the Remand Results comply with Nexco I, are supported by substantial evidence, and in accordance with law. [Def.-Int.] Cmts. in Supp. [Remand Results] at 1, Nov. 13, 2023, ECF No. 54 ("Def.-Int. Cmts.").

JURISDICTION AND STANDARD OF REVIEW

The Court has jurisdiction pursuant to Section 516A of the Tariff Act of 1930,³ as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) and 28 U.S.C. § 1581(c) (2018),⁴ which grants the Court authority to review actions contesting the final determination in an antidumping duty order. The Court will uphold Commerce's determination unless it is "unsupported by substantial evidence on the record, or otherwise not 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.' " Xinjiamei Furniture Co. v. United States, 968 F. Supp. 2d 1255, 1259 (Ct. Int'l Tr. 2014) (quoting Nakornthai Strip Mill Pub. Co. v. United States, 587 F. Supp. 2d 1303, 1306 (Ct. Int'l Trade 2008)).

DISCUSSION

On remand, Commerce maintains the reasonableness of its determinations in Nexco I. Commerce explains that using acquisition prices for raw honey as a proxy for beekeepers' COP is reasonable because acquisition costs capture all the actual manufacturing costs of the honey Nexco exports. Remand Results at 7-8; 25-29. Further, Commerce explains that month-to-month averaging of Nexco's U.S. sale prices with normal values based on Nexco's third-country sales...