Psc Vsmpo-Avismo Corp. v. United States , 688 F.3d 751 ( 2012 )

United States Court of Appeals
for the Federal Circuit
__________________________
PSC VSMPO-AVISMA CORPORATION
AND VSMPO-TIRUS, U.S., INC.,
Plaintiffs-Cross Appellants,
v.
UNITED STATES,
Defendant-Appellee,
AND
US MAGNESIUM LLC,
Defendant-Appellant.
__________________________
2011-1370, -1395
__________________________
Appeals from the United States Court of International
Trade in consolidated case nos.08-CV-0321 and 08-CV-
0366, Judge Judith M. Barzilay.
_________________________
Decided: July 27, 2012
_________________________
MARK P. LUNN, Arent Fox LLP, of Washington, DC,
argued for plaintiffs-cross appellants. With him on the
brief were JOHN M. GURLEY and DIANA DIMITRIC QUAIA.
RENEE GERBER, Trial Attorney, Commercial Litigation
Branch, Civil Division, United States Department of
PSC VSMPO-AVISMA v. US 2
Justice, of Washington, DC, argued for defendant-
appellee. With her on the brief were TONY WEST, Assis-
tant Attorney General, JEANNE E. DAVIDSON, Director,
and CLAUDIA BURKE, Assistant Director.
JEFFREY M. TELEP, King & Spalding LLP, of Washing-
ton, DC, argued for defendant-appellant. With him on the
brief were STEPHEN A. JONES and JEFFREY B. DENNING.
__________________________
Before PROST, SCHALL, and REYNA, Circuit Judges.
SCHALL, Circuit Judge.
This is an international trade case. It arises out of
the Department of Commerce’s (“Commerce”) 2006/2007
administrative review of the antidumping duty order on
magnesium metal from the Russian Federation. See
Notice of Antidumping Duty Order: Magnesium Metal
from the Russian Federation, 70 Fed. Reg. 19,930 (Dep’t
of Commerce Apr. 15, 2005) (“Antidumping Order”).
Following the review, Commerce imposed an antidumping
duty of 15.77 percent on U.S. imports of magnesium metal
exported to the United States from the Russian Federa-
tion by PSC VSMPO-Avisma Corporation (“Avisma”), a
manufacturer of magnesium and titanium sponge. Mag-
nesium Metal from the Russian Federation: Final Results
of Antidumping Duty Administrative Review, 73 Fed.
Reg. 52,642 (Dep’t of Commerce Sept. 10, 2008) (“Final
Results”); Issues and Decision Memorandum for the
Antidumping Duty Administrative Review of Magnesium
Metal from the Russian Federation (Sept. 2, 2008) (“Final
Results Memo”). Commerce imposed this antidumping
margin after calculating the normal value of Avisma’s
sales of magnesium based upon constructed value.
3 PSC VSMPO-AVISMA v. US
Avisma and its U.S. subsidiary, VSMPO Tirus, U.S.
Inc. (“Tirus”), challenged the Final Results in the United
States Court of International Trade (“Trade Court”). 1 In
doing so, Avisma also challenged Commerce’s decision
during the administrative review to exclude as untimely,
and not consider, the affidavit of its accounting expert,
Dr. George Foster (“Foster Affidavit”). US Magnesium
LLC (“US Magnesium”), a U.S. producer of magnesium,
intervened in the proceedings as a defendant. On October
20, 2009, without reaching the merits, the Trade Court
remanded the case to Commerce with the instruction that
Commerce consider the Foster Affidavit. PSC VSMPO-
AVISMA Corp. v. United States, No. 08-00321, 2009 WL
3423021 (Ct. Int’l Trade Oct. 20, 2009) (“Avisma I”). On
remand, Commerce considered the Foster Affidavit but
declined to alter the determination in the Final Results.
Results of Redetermination Pursuant to Remand, PSC
VSMPO-Avisma Corp. v. United States, (Mar. 30, 2010)
(“First Remand Determination”). On August 17, 2010, the
Trade Court held that the Final Results and First Re-
mand Determination were not in accordance with law and
not supported in the record. PSC VSMPO-Avisma Corp.
v. United States, 724 F. Supp. 2d 1308 (Ct. Int’l Trade
2010) (“Avisma II”). The court based its decision on its
conclusion that, when determining Avisma’s magnesium
production costs for purposes of calculating the con-
structed value of Avisma’s magnesium, Commerce was
required to take into account Avisma’s entire production
process, which includes titanium, as well as magnesium.
Id. at 1316. In the Final Results and First Remand
Determination, Commerce only focused on Avisma’s
1 When discussing proceedings in the Trade Court
and this court, we refer to Avisma and Tirus collectively
as “Avisma.” Otherwise, all references are to Avisma
alone.
PSC VSMPO-AVISMA v. US 4
magnesium production process. The court remanded to
Commerce for further proceedings. Id.In its second remand determination, in accordance
with Avisma II, Commerce determined the constructed
value of Avisma’s magnesium by taking into account
Avisma’s entire production process. Results of Redeter-
mination Pursuant to Remand, PSC VSMPO-Avisma
Corp. v. United States, (Nov. 22, 2010) (“Second Remand
Determination”). 2 This resulted in an antidumping duty
of 8.51 percent for Avisma’s magnesium. Id. at 15. On
March 1, 2011, the Trade Court sustained Commerce’s
Second Remand Determination and issued final judgment
accordingly. PSC VSMPO-Avisma Corp. v. United States,
No. 08-00321, 2011 WL 769998 (Ct. Int’l Trade Mar. 1,
2011) (“Avisma III”).
US Magnesium now appeals the decision of the Trade
Court. It contends that the court erred (1) in requiring
Commerce to consider the Foster Affidavit; and (2) in
rejecting the Final Results. For its part, Avisma cross-
appeals part of the decision in Avisma III; it contends that
the Trade Court erred in affirming Commerce’s selection
of the cost database it used in the Second Remand Deter-
mination. The United States urges affirmance of the final
judgment in Avisma III.
For the reasons set forth below, we hold that the
Trade Court erred in requiring Commerce to consider the
Foster Affidavit. We also hold that the court erred in
2 Although Commerce complied with the Trade
Court’s rulings in Avisma I and Avisma II, it expressed
disagreement with the rulings in its remand determina-
tions. First Remand Determination at 2 (“The Depart-
ment disagrees, respectfully, with the Court’s
conclusion . . . .”); Second Remand Determination at 3-5
(“At the outset, the Department respectfully disagrees
with the Court’s Remand Order.”).
5 PSC VSMPO-AVISMA v. US
rejecting the Final Results. Accordingly, we reverse
Avisma III and remand the case to the Trade Court,
which is instructed to enter judgment reinstating the
Final Results. Because of our disposition of the case, it is
not necessary for us to reach Avisma’s cross-appeal.
BACKGROUND
I.
A brief description of Avisma’s magnesium and tita-
nium sponge production processes is necessary in order to
understand the issues presented in this appeal. At its
facility located in the city of Berezniki in Perm Krai,
Russia, Avisma produces magnesium and titanium
sponge, along with other products. Final Results Memo at
2. In the magnesium production process, enriched carnal-
lite is first refined through dehydration and then through
electrolysis to produce raw magnesium and chlorine gas. 3
Id. Most of the resultant raw magnesium is then proc-
essed into pure and alloyed magnesium, which is the
subject merchandise of the antidumping order. Id.However, a portion of the raw magnesium is used in the
titanium sponge production process. Id. Some of the
chlorine gas produced in the carnallite refinement process
also is used in the production of titanium sponge. Id.The titanium sponge production process, which takes
place at OPU-3, uses ilmenite ore as the major input. Id.After the ilmenite ore is reduced to a slag consisting of
iron, titanium oxide, and carbon dioxide, the chlorine gas
generated in the magnesium production process is used to
separate titanium from the titanium oxide, forming
3 Dehydration takes place at OPU-1; electrolysis
takes place at OPU-2. OPU-1, OPU-2, and OPU-3 are
production points in the Berezniki facility. See Final
Results Memo at 3.
PSC VSMPO-AVISMA v. US 6
titanium tetrachloride. Id. The raw magnesium from the
magnesium production process is then used to separate
the chlorine gas from the titanium tetrachloride, which
produces titanium and magnesium dichloride. Id. The
titanium is further refined to produce titanium powder
and titanium sponge. Finally, chlorine gas resulting from
the magnesium production process and not used in the
production of titanium sponge is either recycled back into
the carnallite refinement process or used to produce
calcium chloride, a de-icer. Id.II.
On February 27, 2004, a coalition of domestic magne-
sium producers, including US Magnesium, filed an anti-
dumping duty petition. Notice of Initiation of
Antidumping Duty Investigations: Magnesium Metal
from the People’s Republic of China and the Russian
Federation, 69 Fed. Reg. 15,293, 15,293 (Dep’t of Com-
merce Mar. 25, 2004). The petition related to imports of
pure and alloy magnesium metal from the Russian Fed-
eration and the People’s Republic of China. Id. at 15293–
94. In 2005, Commerce issued an antidumping order on
magnesium metal from the Russian Federation. Anti-
dumping Order. Pursuant to that order, Commerce
imposed an antidumping duty of 21.71 percent on magne-
sium metal imported by Avisma. Id., 70 Fed. Reg. at
19,931. Commerce subsequently instituted a second
administrative review of the antidumping order with
respect to Avisma, among others, for the period from April
1, 2006, through March 31, 2007. Initiation of Antidump-
ing and Countervailing Duty Administrative Reviews and
Request for Revocation in Part, 72 Fed. Reg. 29,968 (Dep’t
of Commerce May 30, 2007). As noted, after conducting
the administrative review, Commerce established an
antidumping duty rate of 15.77 percent ad valorem on
7 PSC VSMPO-AVISMA v. US
Avisma’s U.S. imports of magnesium made during the
period of review.
An antidumping duty represents the amount by which
the normal value of subject merchandise exceeds its
export price. 19 U.S.C. § 1673. Normal value is the price
at which the merchandise is sold for consumption within
the exporting country. Id. § 1677b(a)(1). Export price is
the price at which the merchandise is sold for importation
into the United States. Id. § 1677a(a). When Commerce
cannot determine normal value based on actual sales of
the subject merchandise in the home market, it may base
normal value on a constructed value as a proxy for the
sale price in the home market. Id. § 1677b(a)(4). Con-
structed value for merchandise represents the sum of (1)
the cost of materials and fabrication or other processing;
(2) selling, general and administrative expenses, and
profit; and (3) the cost of containers and coverings. Id.
§ 1677b(e). In the Final Results, Commerce based its
determination of the normal value of Avisma’s magne-
sium on constructed value.
III.
As described above, Avisma’s production process does
not yield magnesium as a distinct product until after
enriched carnallite has been refined through dehydration
at OPU-1 and then electrolysis at OPU-2. At that point,
raw magnesium and chlorine gas emerge as joint products
– two dissimilar end products that are produced from a
single production process. See Robert A. Anthony &
James S. Reece, Accounting Principles 442 (5th ed. 1983).
During the administrative review, in its preliminary
results, in arriving at a constructed value for magnesium,
Commerce adopted a methodology whereby magnesium
and chlorine gas were treated as joint main products, with
the costs of production being allocated between them at
PSC VSMPO-AVISMA v. US 8
OPU-2, the split-off point where they become distinct
products. Commerce performed the allocation based upon
each product’s net realizable value (“NRV”) through OPU-
2. See Magnesium Metal from the Russian Federation:
Preliminary Results of Antidumping Duty Administrative
Review, 73 Fed. Reg. 24,541, 24,544–45 (Dep’t of Com-
merce May 5, 2008) (“Preliminary Results”).
NRV is the selling price of a product less any costs
necessary to complete and sell it. Anthony & Reece at
442. Accordingly, when costs are allocated to joint prod-
ucts based upon NRV in order to determine constructed
value, they are allocated to each product in proportion to
the amount of revenue contributed by that product.
Consequently, the allocated costs, and thus the con-
structed value, of each joint product depend not only upon
that product’s NRV but also the NRV of the other joint
product. That is because any increase in the NRV of a
joint product results in a greater proportion of the costs
being allocated to that joint product and a reduced pro-
portion of the costs being allocated to the other joint
product. In its constructed value calculation for magne-
sium, Commerce thus was required to fix an NRV for both
magnesium and chlorine. In its preliminary results,
Commerce determined the NRV for magnesium based
upon magnesium prices from before the period of review. 4
Preliminary Results, 73 Fed. Reg. at 24,545. Commerce
determined that because chlorine is not sold by Avisma
4 “ When determining the NRV of the subject mer-
chandise for a value allocation, [Commerce] typically
looks to prices prior to the period of investigation or
review in order to avoid the problem of circularity. The
circularity problem occurs when an allegation of dumping
calls into question the reliability of using dumped prices
to allocate costs to subject merchandise in the process of
determining whether dumping occurred during the pe-
riod.” Final Results Memo at 4 n.3.
9 PSC VSMPO-AVISMA v. US
and because its main benefit to Avisma is its use in Av-
isma’s titanium production process, the NRV of chlorine
should be based upon what Avisma would have to spend
to purchase the chlorine necessary for its titanium pro-
duction process. Final Results Memo at 4.
Avisma argued that Commerce’s approach misunder-
stood Avisma’s production process. First, Avisma con-
tended that magnesium should be treated as a by-product
of its titanium production rather than as a main product. 5
Id. Second, Avisma urged that if Commerce was going to
treat magnesium as a main product, then the NRV of
chlorine should not be based upon the market price of
chlorine but, rather, upon the sale prices of products
downstream from chlorine, Avisma’s titanium products.
Id. at 10. In presenting these arguments, Avisma urged
that Commerce’s approach in the Preliminary Results
failed to “incorporat[e] the economic reality of AVISMA’s
entire production facility.” Id. at 11. Importantly, Av-
isma’s approach resulted in a lower constructed value for
magnesium and thus a lower antidumping margin be-
cause its approach increased the NRV of chlorine and
thus reduced the amount of costs allocated to magnesium
through OPU-2.
5 The classification of a joint product as either a
main product or a by-product affects the constructed value
determination. By-products, a type of joint product, are
products that result from a process whose main objective
is the production of another product and not the by-
product itself. Anthony & Reece at 443. By-products are
treated such that no profit is reported for them. Id. Thus,
all profits are attributed to the main product. Id. Conse-
quently, the constructed value of a product is lower if it is
classified as a by-product rather than a main product
because the constructed value of a by-product does not
include an amount for profit.
PSC VSMPO-AVISMA v. US 10
Avisma and US Magnesium each submitted case
briefs addressing changes they believed should be made
in the preliminary results. Avisma I, 2009 WL 3423021,
at *2. Commerce, however, rejected Avisma’s first brief
and a portion of its second on the ground that both con-
tained new factual information in the form of the attached
Foster Affidavit, in which Dr. Foster advocated Avisma’s
approach for determining constructed value. Commerce
took the position that because the affidavit constituted an
expert opinion submitted to provide further evidentiary
support for Avisma’s arguments, it was new factual
information and was therefore untimely pursuant to 19
C.F.R. § 351.301(b)(2). Under that regulation, the dead-
line for the submission of factual information is 140 days
after the last day of the anniversary month of the publica-
tion of the Antidumping Order. In this case, the deadline
for the submission of factual information was September
17, 2007. Avisma did not submit the Foster Affidavit
until June 11, 2008, however. Letter from Laurie
Parkhill, Dep’t of Commerce, to John M. Gurley (June 20,
2008) at 1 (“Parkhill Letter”).
In September of 2008, Commerce formally adopted
the methodology set forth in the preliminary results.
Final Results; Final Results Memo. In doing so, Com-
merce rejected Avisma’s assertion that magnesium should
be treated as a by-product of the titanium process. Final
Results Memo at 5–10. Commerce also rejected Avisma’s
contention that the NRV of chlorine should be based upon
the sale price of titanium products, stating that “it is
illogical to create a value for chlorine using an NRV
method that does not result in a value that reflects a real
world-market price of chlorine . . . .” Id. at 13–16. On the
basis of its constructed value methodology, Commerce
imposed an antidumping margin of 15.77 percent on
Avisma’s magnesium metal.
11 PSC VSMPO-AVISMA v. US
IV.
Avisma appealed Commerce’s determination to the
Trade Court. Avisma I, 2009 WL 3423021. Thereafter, in
due course, Avisma and US Magnesium each moved for
judgment on the agency record. Addressing the motions,
the court turned first to the issue of the Foster Affidavit.
The court noted that “[l]ong-established principles of
administrative law imbue agencies with ample discretion
to craft their own rules and procedures, including the
authority to establish and enforce time limits concerning
the submission of written information and data.” Id. at *5(internal quotations omitted). Next, the court held that
the Foster Affidavit “unambiguously” fell into the category
of factual information. Id. at *6. The court found, how-
ever, that the circumstances of the case were not typical
because the question of constructed value in the case
presented an issue of first impression, and because a
leading accounting expert (Dr. Foster) deemed Com-
merce’s approach inappropriate. Id. Based on these
circumstances and “the mandate for accuracy in anti-
dumping determinations,” the Trade Court remanded the
case for further proceedings with the instructions that
Commerce admit and consider the Foster Affidavit. Id.The court reserved for future proceedings the question of
whether Commerce’s or Avisma’s methodology was
proper. Id. at *6–*7.
Pursuant to the Trade Court’s order, Commerce un-
dertook a redetermination in light of the Foster Affidavit,
submitting the results in the First Remand Determina-
tion. In that determination, Commerce decided that the
methodology applied in the Final Results was reasonable
and appropriate. First Remand Determination at 3–4.
Consequently, it did not recalculate the antidumping
margin for Avisma’s magnesium metal. Id. at 30.
PSC VSMPO-AVISMA v. US 12
Avisma and US Magnesium both appealed Com-
merce’s determination to the Trade Court. Avisma II, 724
F. Supp. 2d 1308. Avisma contested Commerce’s chlorine
gas valuation methodology, arguing that the approach
“inappropriately truncates the production process at
Avisma’s facilities and thereby ignores the intertwined
nature of Avisma’s operations.” Id. at 1312. Despite
agreeing “in large part” with Commerce’s determination,
US Magnesium disagreed with Commerce’s method for
constructing the value of chlorine gas. Id. In reviewing
Commerce’s methodology, the Trade Court interpreted the
statutory framework as requiring Commerce “to take into
account ‘the cost of materials and fabrication or other
processing of any kind employed in producing the mer-
chandise . . . in the ordinary course of business.’” Id. at
1313 (quoting 19 U.S.C. § 1677b(e)(1)) (emphasis in
original). The court determined that Commerce’s meth-
odology was not in accordance with the statute because it
failed to take into account Avisma’s ordinary course of
business; that is, Commerce’s methodology did not reflect
Avisma’s status as primarily a producer of titanium
sponge. Id. at 1313–16. The Trade Court thus remanded
the case with instructions to recalculate the NRV of
chlorine by focusing on Avisma’s entire production proc-
ess, including the titanium production process. Id. at
1316.
On remand, Commerce recalculated the antidumping
margin pursuant to the methodology advocated by Av-
isma and endorsed by the Trade Court. Second Remand
Determination. In doing so, Commerce relied on a cost
database supplied by Avisma called COP-1.2. Id. at 8.
Commerce rejected Avisma’s contention that the COP-1.2
database contained errors and that another cost database
supplied by Avisma, COP-1.1, should form the basis for
Commerce’s calculations. Id. at 8–12.
13 PSC VSMPO-AVISMA v. US
Both Avisma and US Magnesium appealed aspects of
the Second Remand Determination. Avisma III, 2011 WL
769998. Avisma appealed Commerce’s determination
that COP-1.2 was the proper cost database, while US
Magnesium sought reconsideration of the legal conclu-
sions in Avisma II. 6 Id. at *1. Despite the parties’ argu-
ments, the Trade Court sustained the Second Remand
Determination. Id. This appeal followed. We have juris-
diction pursuant to 28 U.S.C. § 1295(a)(5).
DISCUSSION
I.
“In reviewing a decision by the Court of International
Trade, this court applies anew the statutory standard of
review applied by that court to the agency’s decision.”
Thai Pineapple Pub. Co. v. United States, 187 F.3d 1362,
1365 (Fed. Cir. 1999) (citing PPG Indus., Inc. v. United
States, 978 F.2d 1232, 1236 (Fed. Cir. 1992)). “In doing
so, we uphold Commerce’s determination unless it is
‘unsupported by substantial evidence on the record, or
otherwise not in accordance with law.’” Micron Tech., Inc.
v. United States, 117 F.3d 1386, 1393 (Fed. Cir. 1997)
(quoting 19 U.S.C. § 1516a(b)(1)(B)(i)).
US Magnesium appeals to this court on the grounds
that the Foster Affidavit was properly excluded and that
the Final Results were in accordance with law. Avisma
cross-appeals on the ground that Commerce’s reliance on
the COP-1.2 database was improper. Commerce urges
affirmance of Avisma III. We begin our analysis with the
issue of the Foster Affidavit.
6 Specifically, US Magnesium asked the Trade
Court to reconsider the holding of Avisma II and reinstate
the First Remand Determination. Avisma III, 2011 WL
769998, at *1.
PSC VSMPO-AVISMA v. US 14
II.
A.
US Magnesium contends that the Trade Court erred
first in requiring Commerce to admit and consider the
Foster Affidavit. It argues that, pursuant to 19 C.F.R.
§ 351.102(b)(21), the affidavit constituted new factual
information, a conclusion with which the Trade Court
agreed. Def.’s Reply Br. at 20. Because the record was
closed to new factual information at the time the Foster
Affidavit was submitted, US Magnesium claims that
Commerce was within its discretion in rejecting it. Def.’s
Br. at 33–34. US Magnesium states that none of the
grounds identified by the Trade Court merited reversing
Commerce’s discretion to enforce its deadlines. Id. at 34–
35.
Avisma responds by arguing that Commerce’s exclu-
sion of the Foster Affidavit was improper. Avisma con-
tends that the affidavit was not new factual information,
but simply corroboration of claims and data previously
submitted. Pls.’ Br. at 26–28. Alternatively, Avisma
argues that the Trade Court did not err in requiring
Commerce to consider the affidavit because the matter
before Commerce was one of first impression that would
have significant impact on future antidumping determi-
nations. Id. at 22–23. Lastly, Avisma contends that it
submitted the Foster Affidavit when it first learned that
Commerce had decided to use an accounting methodology
different from the one Avisma had proposed and that
therefore refusal to accept the affidavit constituted a
denial of due process. Id. at 26–29.
B.
We start from the premise that, “[a]bsent constitu-
tional constraints or extremely compelling circumstances
15 PSC VSMPO-AVISMA v. US
the administrative agencies should be free to fashion their
own rules of procedure and to pursue methods of inquiry
capable of permitting them to discharge their multitudi-
nous duties.” Vt. Yankee Nuclear Power Corp. v. Natural
Res. Def. Council, Inc., 435 U.S. 519, 543–44, 98 S. Ct.
1197, 1211, 55 L. Ed. 2d 460, 479–80 (1978) (internal
quotations omitted). Accordingly, absent such constraints
or circumstances, courts will defer to the judgment of an
agency regarding the development of the agency record.
To do otherwise would “run[] the risk of ‘propel[ling] the
court[s] into the domain which Congress has set aside
exclusively for the administrative agency.’” FPC v.
Transcon. Gas Pipe Line Corp., 423 U.S. 326, 333, 96 S.
Ct. 579, 583, 46 L. Ed. 2d 533, 540 (1976) (quoting SEC v.
Chenery Corp., 332 U.S. 194, 196, 67 S. Ct. 1575, 1577, 91
L. Ed. 1955, 1999 (1947)).
Commerce rejected the Foster Affidavit on the ground,
that as expert opinion submitted to provide further evi-
dentiary support for Avisma’s arguments, the affidavit
constituted new factual information and was therefore
untimely pursuant to 19 C.F.R. § 351.301(b). Parkhill
Letter at 2. Pursuant to Commerce’s regulations, factual
information includes (1) initial and supplemental ques-
tionnaire responses, (2) data or statements of fact in
support of allegations, (3) other data or statements of fact,
and (4) documentary evidence. 19 C.F.R. § 351.102(b)(21).
Commerce determined that the Foster Affidavit consti-
tuted new factual information because “it provide[d]
further evidentiary support for [AVISMA’s] arguments”
and “include[d] detailed analysis regarding AVISMA’s
products, production facilities, and production processes
as well as discussion regarding preferred approaches to
allocate joint costs.” Parkhill Letter at 2. Commerce
contrasted the affidavit with “arguments included in case
PSC VSMPO-AVISMA v. US 16
and rebuttal briefs which are intended as persuasive
argumentation rather than evidence.” Id.We agree with both Commerce’s and the Trade
Court’s characterization of the Foster Affidavit as factual
information. The weight accorded the Foster Affidavit
arose not from the underlying data submitted therein, but
rather from Dr. Foster’s analysis of that data. Thus,
although the underlying data might in fact have been
cumulative, the importance of the affidavit rests in Dr.
Foster’s status as a third-party expert. Accordingly, as
the Trade Court stated, “expert opinion analyzing re-
ported information ‘clearly assumes the weight of evi-
dence’ and, as such, amounts to ‘[d]ata or statements of
fact in support of allegations,’ i.e., factual information.”
Avisma I, 2009 WL 3423021 at *6 (citing Coal. for the
Pres. of Am. Brake Drum & Rotor Aftermkt. Mfrs. v.
United States, 44 F. Supp. 2d 229, 240–41 & n.19 (Ct. Int’l
Trade 1999)).
Under 19 C.F.R. § 351.301(b)(2), Avisma had until
September 17, 2007, to submit factual information to
Commerce to be used in the Final Results. Avisma I,
2009 WL 3423021, at *5. Despite that deadline, Avisma
did not submit the Foster Affidavit until June 11, 2008.
Parkhill Letter at 1. Thus, the Foster Affidavit was un-
timely and properly rejected by Commerce. 7
Although the Trade Court correctly determined that
the Foster Affidavit was untimely-submitted factual
information, the court erred when, in spite of this deter-
7 “ Commerce generally does not consider untimely
filed factual information.” Essar Steel Ltd. v. United
States, 678 F.3d 1268, 1278 (Fed. Cir. 2012) (citing 19
C.F.R. § 351.302(d)(1) (“[T]he Secretary will not consider
or retain in the official record of the proceed-
ing . . . untimely filed factual information . . . .”)).
17 PSC VSMPO-AVISMA v. US
mination, it ordered Commerce to admit the affidavit into
the record because of circumstances the court described as
“not typical.” Avisma I, 2009 WL 3423021, at *6. The
court expressed concern that the case presented “an issue
of first impression for the agency” that “may establish
methodological precedent for future similar investiga-
tions.” Id. Because of this concern, it ruled that Com-
merce should consider the Foster Affidavit “to ensure the
intent of the antidumping laws is upheld.” Id.In our view, the Trade Court improperly intruded
upon Commerce’s power to apply its own procedures for
the timely resolution of antidumping reviews. The role of
judicial review is limited to determining whether the
record is adequate to support the administrative action.
A court cannot set aside application of a proper adminis-
trative procedure because it believes that properly ex-
cluded evidence would yield a more accurate result if the
evidence were considered. Indeed, the pursuit of “what
the court perceives to be the ‘best’ or ‘correct’ result”
would render judicial review “totally unpredictable.” Vt.
Yankee, 435 U.S. at 546, 98 S. Ct. at 1213, 55 L. Ed. 2d at
481. That an antidumping case may present an issue of
first impression does not serve to give the Trade Court
and this court license to usurp the role that Congress has
delegated to Commerce.
Our conclusion is supported by our recent decision in
Essar Steel Ltd. v. United States, 678 F.3d 1268 (Fed. Cir.
2012). There, the plaintiff had appealed Commerce’s
application of adverse facts during an antidumping inves-
tigation based upon the plaintiff having provided false
information to Commerce regarding one of the its foreign
facilities during the investigation. Id. at 1271. Relying
on information which had arisen in a separate investiga-
tion and which contradicted the adverse facts, the Trade
Court remanded the case to Commerce with instructions
PSC VSMPO-AVISMA v. US 18
to consider the information despite the court’s recognition
that the plaintiff had not acted to the best of its ability in
supplying information to Commerce. Id. at 1276–77. We
reversed the Trade Court’s ruling on the issue, noting
that “the trial court’s order usurps agency power, under-
mines Commerce’s ability to administer the statute
entrusted to it, contradicts important principles of final-
ity, and discourages compliance.” Id. at 1278. Underlying
both the holding in Essar Steel and our holding today is a
recognition that courts must not improperly intrude upon
an agency’s power to implement and enforce proper
procedures for constructing an agency record.
Avisma’s complaint that exclusion of the Foster Affi-
davit violated its due process rights lacks merit. The due
process right to which Avisma was entitled was “the right
to notice and a meaningful opportunity to be heard.”
LaChance v. Erickson, 522 U.S. 262, 266, 118 S. Ct. 753,
756, 139 L. Ed. 2d. 695, 700 (1998). Avisma only sought
the opinion of Dr. Foster after its proposed methodology
was rejected by Commerce. Pls.’ Br. at 22. Avisma was
well aware throughout the review, however, that Com-
merce was considering using the accounting methodology
ultimately adopted in the Final Results and of the appli-
cable dates for submission of factual information. Com-
merce employed this methodology during the first
administrative review and, indeed, this methodology was
even used by Avisma in its internal records until January
1, 2007. Final Results Memo at 7. Avisma cannot claim
to have been unaware that Commerce might opt to reject
its proposed new methodology. Avisma had the opportu-
nity to put forth evidence supporting its proposed account-
ing methodology but failed to do so. Avisma was not
deprived of due process.
19 PSC VSMPO-AVISMA v. US
III.
A.
US Magnesium also contends that the Trade Court
erred in rejecting the Final Results. US Magnesium
argues that 19 U.S.C. § 1677b(f) sets forth how to calcu-
late costs of production and constructed value and that
Commerce’s original methodology comported with the
statute, as the methodology was consistent with both
Avisma’s historical accounting practice and generally
accepted accounting principles. 8 Def.’s Br. at 39–48.
Alternatively, US Magnesium argues that Commerce’s
methodology was a reasonable interpretation of the
statute and thus was entitled to Chevron deference. Id. at
44–49.
According to US Magnesium, in its analysis the Trade
Court misapplied 19 U.S.C. § 1677b(e)(1). Id. at 49–54.
Section 1677b(e)(1) provides that one component of con-
structed value is “the cost of materials and fabrication or
8 Section 1677b(f)(1)(A) provides that:
Costs shall normally be calculated based on the
records of the exporter or producer of the mer-
chandise, if such records are kept in accordance
with the generally accepted accounting principles
of the exporting country (or the producing coun-
try, where appropriate) and reasonably reflect
the costs associated with the production and sale
of the merchandise. The administering authority
shall consider all available evidence on the
proper allocation of costs, including that which is
made available by the exporter or producer on a
timely basis, if such allocations have been his-
torically used by the exporter or producer, in par-
ticular for establishing appropriate amortization
and depreciation periods, and allowances for
capital expenditures and other development
costs.
PSC VSMPO-AVISMA v. US 20
other processing of any kind employed in producing the
merchandise, during a period which would ordinarily
permit the production of the merchandise in the ordinary
course of business.” US Magnesium contends that the
“ordinary course of business” language within the statute
merely required Commerce to construct the value of
magnesium from the records of Avisma during a period of
normal business operation. Id. at 49–53. Thus, US
Magnesium urges that the Trade Court erred when it held
that the “ordinary course of business” language required
Commerce to adopt a methodology that encompassed
Avisma’s titanium production process.
Avisma contends that the Trade Court was correct in
ordering the use of Avisma’s proposed methodology.
Noting the opinion of the Trade Court, Avisma contends
that the “ordinary course of business” language in the
statute requires Commerce to take into account Avisma’s
entire business, which includes the production of tita-
nium. Pls.’ Br. at 35–36.
B.
We first address the Trade Court’s determination that
the language of 19 U.S.C. § 1677b(e)(1) mandates the
adoption of Avisma’s facility-wide approach in order “to
take into account Avisma’s ordinary course of business.”
Avisma II, 724 F. Supp. 2d at 1313. Based on its reading
of the statute, the court reversed the Final Results as not
in accordance with law. Id. 9 The plain language of
9 The Trade Court explained its reasoning as fol-
lows:
When Commerce uses a constructed value as the
normal value of the subject merchandise, Con-
gress instructs the Department to take into ac-
count “the cost of materials and fabrication or
other processing of any kind employed in produc-
21 PSC VSMPO-AVISMA v. US
§ 1677b(e)(1), however, does not support the imposition of
such a requirement. Accordingly, the Trial Court erred
when it rejected the Final Results on this basis.
Section 1677b(e)(1) requires that constructed value be
calculated, in part, from “the cost of materials and fabri-
cation or other processing of any kind employed in produc-
ing the merchandise, during a period which would
ordinarily permit the production of the merchandise in
the ordinary course of business.” The Trade Court con-
strued the phrase “in the ordinary course of business” as
requiring Commerce to include in its constructed value
methodology costs involved in Avisma’s entire production
process. This was error. The plain language of the stat-
ute indicates that the phrase “during a period which
would ordinarily permit the production of the merchan-
dise in the ordinary course of business” aims to ensure
that constructed value is based on the costs of production
incurred when the facility is operating in the usual and
ordinary course of business, so as to guard against aber-
rant costs not typically incurred in the normal course of
producing the subject merchandise. The phrase does not
ing the merchandise . . . in the ordinary course of
business.” 19 U.S.C. § 1677b(e)(1). The “ordinary
course of business” means “[t]he transaction of
business according to the common usages and
customs of . . . the particular individual whose
acts are under consideration.” Black's Law Dic-
tionary 1098 (6th ed. 1990); see also Black's Law
Dictionary 404, 1209 (9th ed. 2009). From a
thorough examination of the record, the court
finds that the Department's chosen chlorine gas
valuation methodology in the Redetermination
Results fails to take into account Avisma's ordi-
nary course of business and, therefore, does not
accord with law.
Avisma II, 724 F. Supp. 2d at 1313 (emphasis in original).
PSC VSMPO-AVISMA v. US 22
dictate that Commerce employ a specific cost accounting
methodology that would include Avisma’s entire produc-
tion process.
Although we hold the Trade Court erred in its inter-
pretation of the “ordinary course of business” require-
ment, we still must review Commerce’s determination to
ensure that it is supported by substantial evidence and
otherwise in accordance with law. 19 U.S.C.
§ 1516a(b)(1)(B)(i)). In reviewing whether Commerce’s
interpretation of a statute is in accordance with law, we
review the issue de novo under the Chevron framework.
See Ningbo Dafa Chem. Fiber Co. v. United States, 580
F.3d 1247, 1253 (Fed. Cir. 2009). The first step of the
Chevron analysis is to determine “whether Congress has
directly spoken to the precise question at issue. If the
intent of Congress is clear, that is the end of the matter;
for the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress.” Chevron
U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S.
837, 842–43, 104 S. Ct. 2778, 2781, 81 L. Ed. 2d 694, 702–
03 (1984). If, however, “Congress has not directly ad-
dressed the precise question at issue,” under step two of
Chevron, if an agency’s interpretation is “reasonable,” it is
“given controlling weight unless [it is] arbitrary, capri-
cious, or manifestly contrary to statute.” Id. at 843–44,
104 S. Ct. at 2781–82, 81 L. Ed. 2d at 703. Because in
this case Congress has not directly spoken to the precise
question at issue (what methodology should be used when
allocating costs between products produced jointly for
purposes of determining constructed value for one of the
products), our review centers on whether Commerce’s
chosen methodology in the Final Results rests upon a
reasonable interpretation of the statutes and regulations
it administers. Thai Pineapple, 187 F.3d at 1365 (citing
Chevron, 467 U.S. at 844, 104 S. Ct. at 2782, 81 L. Ed. 2d
23 PSC VSMPO-AVISMA v. US
at 703). In examining Commerce’s approach, we must be
mindful that as the “master of antidumping law,” id.(quoting Daewoo Elec. Co. v. Int’l Union, 6 F.3d 1511,
1516 (Fed. Cir. 1993)), Commerce is entitled to substan-
tial deference in its choice of accounting methodology:
This court has recognized that the antidumping
statute reveals tremendous deference to the ex-
pertise of the Secretary of Commerce in adminis-
tering the antidumping law. Antidumping and
countervailing duty determinations involve com-
plex economic and accounting decisions of a tech-
nical nature, for which agencies possess far
greater expertise than courts. This deference is
both greater than and distinct from that accorded
the agency in interpreting the statutes it adminis-
ters, because it is based on Commerce's technical
expertise in identifying, selecting and applying
methodologies to implement the dictates set forth
in the governing statute, as opposed to interpret-
ing the meaning of the statute itself where am-
biguous.
Fujitsu Gen. Ltd. v. United States, 88 F.3d 1034, 1039
(Fed. Cir. 1996) (internal quotations and citations omit-
ted). Accordingly, “[t]he methodologies relied upon by
Commerce in making its determinations are presump-
tively correct.” Thai Pineapple, 187 F.3d at 1365.
As seen above, Commerce treated magnesium and
chlorine gas as joint products, thus rejecting Avisma’s
characterization of magnesium as a by-product of the
titanium production process. Final Results Memo at 5–
10. Additionally, Commerce calculated the NRV of chlo-
rine based upon what Avisma would have to spend to
purchase the chlorine necessary for its titanium produc-
tion process. In doing so, Commerce also rejected Av-
PSC VSMPO-AVISMA v. US 24
isma’s contention that the NRV of chlorine should be
based upon the sale price of titanium products. Id. at 13–
16
As Avisma acknowledges, the statute does not ex-
pressly provide for any specific allocation methodology for
goods produced jointly. Pls.’ Br. at 34 In view of the
“tremendous deference to the expertise of the Secretary of
Commerce,” Fujitsu, 88 F.3d at 1039, Commerce’s choice
of accounting methodology in the Final Results is sup-
ported by substantial evidence. Commerce supported its
decision to treat chlorine and magnesium as main prod-
ucts and to allocate costs at the OPU-2 split-off point by
stating that “chlorine and magnesium can be identified
and valued objectively before they enter the process for
producing titanium.” Final Results Memo at 6. Moreover,
Commerce highlighted the following reasons further
supporting its chosen approach:
the relative values at the split-off point are sig-
nificant; both products have been treated as main
products in AVISMA’s books and records during
some period of the [Period of Review]; manage-
ment undertakes the production of both products
intentionally either for resale or for use as inputs
in titanium; both products are inputs to, not un-
avoidable consequences of, titanium production;
management further-processes the raw-
magnesium joint product intentionally.
Id. at 10. Lastly, noting that Avisma had used two sepa-
rate accounting methodologies during the period of re-
view, Commerce declined to find that Avisma’s own
records provided clear support for treating magnesium as
a by-product. Id. at 7.
Commerce also provided ample support for its deci-
sion to determine the price of chlorine based upon the cost
25 PSC VSMPO-AVISMA v. US
to Avisma to purchase chlorine necessary for use in its
titanium-production unit. In adopting that approach,
Commerce focused on “the benefits received from the joint
products as of the split-off point” and kept the value of
chlorine tied to a real world price. Id. at 15. Further-
more, Commerce noted that its approach was supported
by the pertinent accounting literature. 10 Id. Finally,
Commerce determined that Avisma’s proposed approach
created an inflated value of chlorine that creates “distor-
tion [by] tying the value of chlorine to the profits earned
on titanium.” Id. at 14–15.
Commerce’s choice of methodology and the resulting
determination of the antidumping margin are both sup-
ported by substantial evidence and are therefore reason-
able. In holding that the statutory language required the
use of Avisma’s proposed accounting methodology, the
Trade Court erred. Accordingly, we reverse the decision
of the Trade Court setting aside the Final Results and
remand for entry of judgment reinstating the Final Re-
sults.
10 Commerce quoted the following passage from
Charles T. Horngren, Srikant M. Datar & George Foster,
Cost Accounting: A Managerial Emphasis 547-48 (9th ed.
1997):
The sales at split-off method allocates joint costs
based on the relative sales value at the split off
point of the total production in the accounting pe-
riod. . . . The sales value at split-off point method
exemplifies the benefits-received criterion of cost
allocation. Costs are allocated to products in
proportion to their ability to contribute revenue.
This method is both straightforward and intui-
tive.
Final Results Memo at 15 n.5.
PSC VSMPO-AVISMA v. US 26
IV.
In light of our decision instructing the Trade Court to
reinstate the Final Results, Avisma’s cross-appeal is
rendered moot. Avisma’s cross-appeal involves Com-
merce’s use of the COP-1.2 database in the Second Re-
mand Determination and an alleged error in the database
related to the pre-split-off costs of titanium products.
Because the pre-split-off costs of titanium products were
not used in the calculation of an antidumping margin in
the Final Results, any alleged discrepancy would have no
effect on the Final Results, a point upon which both
Commerce and Avisma agree. See Pls.’ Br. at 48; Com-
merce’s Br. at 6. Because we hold that the Trade Court
erred in setting aside the Final Results, it is unnecessary
to reach Avisma’s cross-appeal.
CONCLUSION
For the foregoing reasons, we reverse the decision of
the Trade Court. We remand the case to the Trade Court
with the instruction that it enter judgment reinstating
the Final Results.
Each party shall bear its own costs.
REVERSED and REMANDED