United States Court of International Trade

Remand Determination Affirmed

In Changzhou Hawd Flooring Co., Ltd. v. United States, Court No. 12-20, Slip Op. 15-71 (July 6, 2015), the court reviewed the fourth remand results regarding Multilayered Wood Flooring from the People’s Republic of China [(“PRC”)], 76 Fed. Reg. 64,318 (Dep’t Commerce Oct. 18, 2011) (final determination of sales at less than fair value) (“Inv. Final Determination”); Multilayered Wood Flooring from the [PRC], 76 Fed. Reg. 76,690, 76,691-92 (Dep’t Commerce Dec. 8, 2011) (amended final determination of sales at less than fair value and antidumping duty order) (“Inv. Amended Final Determination”).  The only issue remaining for review was the antidumping (“AD”) duty rate assigned to one separate rate respondent – Changzhou Hawd Flooring Co., Ltd., (“Changzhou Hawd” or “Plaintiff”). In the second and supplementing partial third redeterminations, Commerce inferred that, because there were 110 non-cooperative respondents in the investigation, the separate rate was more than de minimis. While others were assigned a specific rate after the First Administrative Review, Commerce did not assign one to Changzhou Hawd, where Commerce did not have enough data on the record to calculate a rate reflective of Changzhou Hawd’s economic reality, and it belatedly initiated an individual investigation of the company .  In Changzhou Hawd, __ CIT at __, 44 F. Supp. 3d at 1385-88, the court found Commerce’s decision to individually investigate Changzhou Hawd at such a late date in the proceeding— and after repeatedly refusing to investigate a would-be voluntary respondent, claiming lack of administrative resources– to be arbitrary and capricious, and remanded accordingly. On remand in its Fourth Redetermination, Commerce again inferred that the separate rate was more than de minimis, but declined, as it did previously, to calculate a separate rate.  Instead, Commerce proposed to continue applying the 3.30 percent cash deposit rate as calculated in the Inv. Amended Final Determination, 76 Fed. Reg. at 76,691-92, until the Second Administrative Review, where Changzhou Hawd is again a separate rate respondent, and Changzhou Hawd’s assessed rate will be set.

The court held that Commerce’s methodology was within a reasonable construction of the statute (19 U.S.C.§ 1673d(c)(5)(A) &(B)), where Commerce inferred from the record that the separate rate was more than de minimis and applied a (more than de minimis) rate calculated for Changzhou Hawd.  Changzhou Hawd, successfully challenged Commerce’s attempt to individually investigate it (and thereby obtain an individual rate), retained its separate rate status, Changzhou Hawd, __ CIT at __, 44 F. Supp. 3d at 1388-90, and as such, it was subject to a reasonably determined separate rate. According to the court, based on the silence of 110 respondents, the resultant gap in the record, and the mixed results of the first [and now second] administrative review[s] — the separate rate (and thus Plaintiff[’s] rate) in this investigation is somewhat more than de minimis and less than AFA.

Finally as to the cash deposit rate, substantial evidence supported leaving the 3.3% ad valorem rate.  Changzhou Hawd’s actual liability will be determined in the Second Administrative Review, where the assessed rate for Changzhou Hawd’s entries will be set, and thus the cash deposit rate is temporary.  Moreover, rate of 3.30 percent was a conservative estimate that aligns with the margins calculated for separate rate respondents (including Changzhou Hawd) in subsequent reviews. Thus, it was reasonable to have Changzhou Hawd pay the temporary cash deposit rate of 3.3% ad valorem.

Plaintiff’s Motion for Judgment on the Agency Record was Granted

In Timken Company v. United States, et al., Cons. Court No. 14-155,  Slip Op. 15-72 (July 8, 2015), the court granted plaintiff’s motion for judgment on the agency record.   Plaintiff

Timken Company (“Timken”) contested the U.S. Department of Commerce’s (“Commerce”) final results in the 2009–2010 annual administrative reviews of the antidumping duty orders covering imports of ball bearings and parts thereof from Japan and the United Kingdom. Ball Bearings and Parts Thereof from Japan and the United Kingdom: Final Results of Antidumping Duty Administrative Reviews and Rescission of Review in Part; 2009–2010, 79 Fed. Reg. 35,312 (Dep’t Commerce June 20, 2014) (“Final Results”). Specifically, Timken challenged Commerce’s failure to apply the differential pricing analysis to determine whether the examined foreign exporters engaged in targeted dumping.

Prior to 2012, Commerce’s default methodology for comparing home market and export prices in administrative reviews had been the average-to-transaction (“A-T”) methodology. After 2012, the average to average transaction methodology was applied. When applying the A-T methodology, Commerce did not allow transactions with export prices above the home market price to offset transactions with export prices below the home market price, a controversial practice commonly referred to as “zeroing.” Commerce is permitted to use the A-T methodology in an investigation if it finds “a pattern of export prices (or constructed export prices) for comparable  merchandise that differ significantly among purchasers, regions, or period of time.” 19 U.S.C. § 1677f-1(d)(1)(B)(i). This pattern is commonly referred to as “targeted dumping.” In order to apply the A-T methodology, a domestic petitioner had to allege before Commerce that targeted dumping occurred.  This requirement was established in Mid Continent Nail Corp. v. United States, 712 F. Supp. 2d 1370, 1372–73 (CIT 2010) (“the Nails test”). Additionally, Commerce must explain why the default A-A methodology cannot take account of the pattern before the A-T methodology can be employed. Id. § 1677f-1(d)(1)(B)(ii). 

The government argued that differential pricing analysis was inapplicable, Timken was required to rely on the Nails test to show that targeted dumping had occurred. Because Timken never submitted the necessary targeted dumping allegations in order to perform the Nails test, Commerce appropriately employed the default A-A comparison methodology. Defendant-intervenors similarly contend that Timken should have submitted Nails test allegations and Timken’s failure to do so was indeed fatal to its position. The government additionally contended that Commerce’s use of the A-A methodology in this case was a reasonable exercise of its discretion.

The court disagreed with defendant and defendant-intervenors.  Commerce simply refused to apply differential pricing analysis because of a date.  Commerce explained that it had “expressly limited the application of our [differential pricing] analysis to those reviews for which preliminary results were signed and issued after March 4, 2013.”As Timken points out, Commerce never justified the use of the A-A comparison methodology based on the lack of Nails test allegations. According to the court, there was no raising of administrative burden or equitable interest in applying the Nails test, and Commerce’s arbitrary cut-off date makes no sense in this case. Commerce has not provided a reasonable justification for refusing to apply its most current methodology to these reviews, and the court holds that the failure to apply the differential pricing analysis was an abuse of discretion. The arbitrariness of Commerce’s determination was evidenced further by the lack of notice given to Timken that the Nails test, which places the burden on petitioners to initiate the targeted dumping inquiry, would be applied instead of the differential pricing analysis that Commerce was applying in the other administrative proceedings at the time.

Moreover Commerce additionally relied on the language in 19 U.S.C. § 1677f-1(d) that provides that Commerce “may” use the A-T comparison methodology if the statutory criteria are met. However giving Commerce discretion does not mean that it may act arbitrarily. Commerce failed to explain why it used the A-A method instead of the previous price differential analysis it was applying.  For these reasons the court remanded the Final Results back to Commerce.