Oy v. United States, Slip Op. 15-24

CP KELCO OY and CP KELCO US, INC., Plaintiffs, v. UNITED STATES, Defendant,andASHLAND SPECIALTY INGREDIENTS, G.P., Defendant-Intervenor.

Slip Op. 15-24 Court No. 13-00079

UNITED STATES COURT OF INTERNATIONAL TRADE

March 25, 2015

Before: Richard W. Goldberg, Senior Judge

PUBLIC VERSION

OPINION

Matthew L. Karma, Nancy A. Noonan, and Tina Termei, Arent Fox LLP, of Washington, DC, for plaintiff.

L. Misha Preheim, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for defendant. With him on the brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was Aman Kakar, Attorney, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce, of Washington, DC.

Edward M. Lebow, Haynes and Boone, LLP, of Washington, DC, for defendant-intervenor Ashland Specialty Ingredients, G.P.

Goldberg, Senior Judge: This case returns after a succinct remand. In its previous opinion, the court invalidated the decision of the Department of Commerce ("Commerce" or "the agency") to calculate antidumping duties for plaintiffs CP Kelco Oy and CP Kelco US, Inc. (collectively "Kelco") using the average-to-transactional methodology. The court foundCommerce acted arbitrarily by failing to explain why Kelco's "targeted" sales were sufficient to merit the average-to-transactional treatment. See CP Kelco Oy v. United States, 38 CIT ___, ___, 978 F. Supp. 2d 1315, 1327-29 (2014). Now the agency has furnished the explanation required, and the court sustains the decision to use the average-to-transactional method to craft Kelco's antidumping rate.

BACKGROUND

The court presumes familiarity with its prior opinion, including the exposition of Commerce's margin calculation methods and the targeted dumping test. The abridged facts that follow will suffice for the sake of this decision.

In 2011, Commerce began an administrative review of an antidumping duty order on carboxymethylcellulose from Finland. Initiation of Antidumping and Countervailing Duty Administrative Reviews, 76 Fed. Reg. 53,404, 53,405 (Dep't Commerce Aug. 26, 2011). During the review, Commerce considered whether to apply its default average-to-average methodology ("A-A"), or its exceptional average-to-transactional methodology ("A-T"), to render Kelco's dumping margins. To guide its decision, Commerce followed the statutory framework in § 777A(d)(1)(B) of the Tariff Act of 1930, 19 U.S.C. § 1677f-1(d)(1)(B) (2012). See Purified Carboxymethylcellulose from Finland, 78 Fed. Reg. 11,817, 11,817 (Dep't Commerce Feb. 20, 2013) (final admin. review) ("Final Results"); Issues & Decision Mem. ("I&D Mem.") at 6, 8-10, PD 80 (Feb. 6, 2013).

That provision, known colloquially as the "targeted dumping" statute, reads as follows:

(B) Exception

The administering authority may determine whether the subject merchandise is being sold in the United States at less than fair value by comparing the weighted average of the normal values to the export prices (or constructed export prices) of individual transactions for comparable merchandise, if--(i) there is a pattern of export prices (or constructed export prices) for comparable merchandise that differ significantly among purchasers, regions, or periods of time, and

(ii) the administering authority explains why such differences cannot be taken into account using a method described in paragraph (1)(A)(i) or (ii) [i.e., the A-A or transactional-to-transactional methods].

19 U.S.C. § 1677f-1(d)(1)(B).

To perform this inquiry, Commerce first applied the so-called Nails test to Kelco's U.S. sales. The Nails test identifies targeted transactions, or patterns of export prices that differ significantly among purchasers, regions, or time periods. See id. § 1677f-1(d)(1)(B)(i); Mid Continent Nail Corp. v. United States, 34 CIT ___, ___, 712 F. Supp. 2d 1370, 1373-74 (2010) (explaining the Nails test). Then, after finding that Kelco targeted [[ ]] percent of its sales by quantity and [[ ]] percent by value, Commerce concluded that the targeting was more than de minimis, comprising a fraction of total U.S. sales sufficient to merit further analysis. See Analysis of Data Submitted by CP Kelco Oy & CP Kelco U.S. Inc. at 2, CD 195 (Feb. 11, 2013) (naming ratios of Kelco's targeted to total U.S. sales); I&D Mem. at 9-10 (finding sufficient volume of sales passed Nails test). The agency did not name the quantum of sales needed to clear the de minimis bar.

Despite this ambiguity, Commerce moved to the second step of the statutory inquiry, which asks whether A-A cannot account for targeted sales. See 19 U.S.C. § 1677f-1(d)(1)(B)(ii). The agency found it could not. A-A yielded a "meaningfully" lower antidumping rate than A-T, so Commerce, in its discretion, applied A-T to Kelco's sales to form a 12.06 percent final rate. Final Results at 11,817 (final rate); I&D Mem. at 9 (meaningful difference test).

Kelco filed suit at the Court of International Trade on February 26, 2013. Summons, ECF No. 1. In its brief Kelco raised a host of claims, only one of which survived judicial review.After dismissing Kelco's arguments regarding Commerce's authority to conduct targeting inquiries in reviews and the legality of the Nails test, the court invalidated Commerce's de minimis finding as arbitrary. Kelco, 38 CIT at ___, 978 F. Supp. 2d at 1327-29. The court's criticism was twofold. First, the court noted that "Commerce never explained what purpose the de minimis test serves in the statutory scheme." Id. at ___, 978 F. Supp. 2d at 1328. It was unclear from the record whether the de minimis analysis helped to identify a pattern of targeting under § 1677f-1(d)(1)(B)(i), or whether the test guided the agency's discretion under § 1677f-1(d)(1)(B)(ii) to use A-T once targeting was found. Second, the court faulted Commerce for failing to identify "the quantum of an exporter's sales that must be targeted to fall above or below the de minimis threshold." Id. Because Commerce never articulated "the basis on which the [agency] exercised its expert discretion," the court remanded for Commerce to explain its construction and application of the de minimis test. Id. at ___, 978 F. Supp. 2d at 1327 (quoting Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 167 (1962)) (internal quotation marks omitted).

On remand, Commerce provided the explanation required. See Final Results of Redetermination Pursuant to Ct. Remand, ECF No. 72 ("Remand Results"). First, Commerce said the de minimis test served both to identify a pattern of targeting, as required under § 1677f-1(d)(1)(B)(i), and to guide Commerce's discretion to apply A-T, as allowed under § 1677f-1(d)(1)(B)(ii). Id. at 9-15. Second, in response to the court's request to identify the quantum of sales that cleared the de minimis bar, Commerce declared that targeted sales were more than de minimis if they comprised more than five percent of total U.S. sales during the review period. Id. at 15-19. Commerce drew this threshold from statutory provisions and regulations that use thesame figure in other contexts, and noted that the threshold corroborated with Commerce's experience in administering the targeted dumping test. See id. at 18-19.

Having rendered this explanation, Commerce again held that Kelco targeted its sales in a volume sufficient to merit consideration of the A-T remedy. After comparing Kelco's A-A rate with its A-T rate, and finding a meaningful difference between the two, Commerce applied A-T to all of Kelco's sales for a 12.06 percent final rate. See id. at 9-10, 16, 20-21.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction to hear this appeal under 28 U.S.C. § 1581(c). The court will sustain the agency's decisions unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

The court now sustains the Remand Results. In its previous opinion, the court invalidated Commerce's targeted dumping decision not because of patent flaws in the agency's reasoning, but because the agency offered no reasoning at all regarding the de minimis test's quantitative contours and role in the statute. Kelco, 38 CIT at ___, 978 F. Supp. 2d at 1327-29. Now Commerce has explained itself to the court's satisfaction, and though reasonable minds may differ over the wisdom of Commerce's choice, the decision merits deference.

I. Commerce Reasonably Explained the De Minimis Test's Role

To begin, the court holds that Commerce reasonably "explained what purpose the de minimis test serves in the statutory scheme." Id. at 1328. In the agency's view, the role is twofold. First, the inquiry helps to identify "a pattern of prices that differ significantly by purchaser, region or period of time" among respondent's U.S. sales. Remand Results 9. Of course, the statute does not say whether Commerce must search out the pattern among allreviewed sales, as it did below, or only among sales to alleged targets. See 19 U.S.C. § 1677f-1(d)(1)(B)(i). Commerce has taken conflicting positions on this issue in the past.¹ But whatever its prior views, the agency acted sensibly here to require that the volume of targeted sales comprise more than a token part of U.S. sales. To form a "pattern," a "mode of behavior or series of acts," such as selective low-cost sales, must be "recognizably consistent." Black's Law Dictionary 1308 (10th ed. 2014). By checking to see whether Kelco's targeting encompassed more than a de minimis share of total sales, Commerce carried its duty to find a recognizable, and hence remediable, pattern of targeting among all reviewed transactions.

Second, the agency explained that the de minimis inquiry informs its choice to impose A-T after finding targeting. Remand Results 13-15. Under the statute, Commerce "may determine" dumping margins using A-T if a respondent's...