CS Wind Vietnam Co. v. United States , 219 F. Supp. 3d 1273 ( 2017 )

Slip Op. 17-26
UNITED STATES COURT OF INTERNATIONAL TRADE
CS WIND VIETNAM CO., LTD., and CS
WIND CORPORATION,
Plaintiffs,
Before: Jane A. Restani, Judge
v.
Court No. 13-00102
UNITED STATES,
Defendant,
WIND TOWER TRADE COALITION,
Defendant-Intervenor.
OPINION
[Commerce’s Results of Redetermination in antidumping duty investigation are sustained.]
Dated: March 16, 2017
Bruce M. Mitchell, Andrew B. Schroth, Ned H. Marshak, and Dharmendra N.
Choudhary, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP, of New York, NY, for
plaintiffs.
Joshua E. Kurland, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for defendant. With him on the brief were Chad A.
Readler, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T.
Blades, Jr., Assistant Director. Of counsel on the brief was Emily R. Beline, Attorney, Office of
the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of
Washington, DC.
Alan H. Price, Daniel B. Pickard, Robert E. DeFrancesco, III, and Derick G. Holt, Wiley
Rein, LLP, of Washington, DC, for defendant-intervenor.
Restani, Judge: This matter is before the court following a remand to the U.S.
Department of Commerce (“Commerce”) ordered after the Court of Appeals for the Federal
Court No. 13-00102 Page 2
Circuit (“Federal Circuit”) issued its mandate in CS Wind Vietnam Co. v. United States, 832
F.3d 1367 (Fed. Cir. 2016) (“CS Wind IV”). In CS Wind IV, the Federal Circuit reversed this
court’s “affirmance of Commerce’s use of packing weights rather than component weights in its
calculation of surrogate values,” and “direct[ed] Commerce to use the manufacturer-reported
weights in its calculation.” Id. at 1374, 1381. In addition, the Federal Circuit vacated this
court’s “affirmance of Commerce’s overhead determination with respect to jobwork charges,
erection expenses, and civil expenses.” Id. at 1381. This court remanded to Commerce the
issues of weights selection and overhead determination. Order 1, Oct. 4, 2016, ECF No. 101
(“Remand Order”). Subsequently, Commerce issued its Final Results of [Third]
Redetermination Pursuant to Court Order, ECF No. 104-1. (“Third Remand Results”).
Defendant-Intervenor Wind Tower Trade Coalition (“WTTC”) opposes the Third Remand
Results on several grounds. Def.-Intvr. the Wind Tower Trade Coalition’s Cmts. on Final
Results of Redetermination Pursuant to Ct. Order 7–29, ECF No. 108 (“WTTC Cmts.”). For the
following reasons, Commerce’s Third Remand Results are sustained.
BACKGROUND
The court presumes familiarity with the underlying facts and procedural history of this
case, and provides only the following relevant facts.
I. Weights Selection
In CS Wind Vietnam Co. v. United States, 971 F. Supp. 2d 1271, 1287–88 (CIT 2014)
(“CS Wind I”), this court sustained Commerce’s decision to base the actual weight of CS Wind
Vietnam Co., Ltd. (“CS Wind”)’s wind towers for the normal value calculation on the weights
found in a transoceanic packing list (“packed weights”), rather than on the net weight of the
factors of production reported by CS Wind (“manufacturer-reported weights”). The court agreed
Court No. 13-00102 Page 3
with Commerce’s rationale that the packed weights would not likely have been “so grossly
overestimated as to chance the misplacement of the wind tower section on a shipping vessel and
risk an imbalance of the vessel or rolling of the tower section in transit.” Id. at 1288 (quoting
Issues and Decision Mem. for the Final Determination at 31, barcode 3111148-01 (Dec. 17,
2012)). On appeal, the Federal Circuit decided that substantial evidence did not support
Commerce’s conclusion that the packed weights were more reliable than the manufacturer-
reported weights. CS Wind IV, 832 F.3d at 1374. The Federal Circuit reasoned that “there is no
evidence that either (a) a mere 4% difference in overall weight [between the packed weights and
manufacturer-reported weights] or (b) the specific difference in weight figures for the small
internal-components portion of the towers [in the manufacturer-reported weights] would make a
difference in maintaining balance on the vessels used for transportation here.” Id. Accordingly,
the Federal Circuit reversed this court’s affirmance of Commerce’s use of the packed
weights. Id. at 1381. In addition, the Federal Circuit “direct[ed] Commerce to use the
manufacturer-reported weights in its calculation.” Id. at 1374. This court then instructed
Commerce to follow the Federal Circuit’s direction to use the manufacturer-reported weights in
its calculation. Remand Order at 1. In the Third Remand Results, Commerce selected under
protest the manufacturer-reported weights. Third Remand Results at 7. Commerce’s sole reason
for this choice was the Federal Circuit’s “direct[ion]” and this court’s accordant remand
instructions. Id.
II. Surrogate Financial Ratios
A. Erection/Civil Income Ratio
Commerce uses surrogate financial ratios, which it converts to percentages, to calculate
the “general expenses and profit” to be included in normal value. See 19 U.S.C.
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§ 1677b(c)(1)(B) (requiring that the normal value for products from nonmarket economies
include amounts for “general expenses and profit”); Hebei Metals & Minerals Imp. & Exp.
Corp., 29 CIT 288, 303 n.7, 366 F. Supp. 2d 1264, 1277 n.7 (2005). The surrogate financial
ratios include the selling, general, and administrative (“SG & A”) ratio, the overhead expense
ratio, and the profit ratio. Hebei Metals, 29 CIT at 303 n.7, 366 F. Supp. 2d at 1277 n.7.
Commerce applies these ratios to the factors of production in order to calculate normal
value. See 19 U.S.C. § 1677b(c)(1)(B); Hebei Metals, 29 CIT at 303 n.7, 366 F. Supp. 2d at
1277 n.7. To calculate the surrogate financial ratios, Commerce relies on surrogate financial
statements, here, from Ganges Internationale Private Limited (“Ganges”). See CS Wind Viet.
Co. v. United States, Slip Op 15-45, 2015 WL 2167462, at *2 (CIT May 11, 2015) (“CS Wind
III”). One particular expense line item in Ganges’ financial statements has proven particularly
difficult to deal with—“Jobwork Charges (including Erection and Civil Expenses).” 1 For
reasons discussed below, Commerce has employed an “erection/civil income ratio,” albeit in
evolved forms, to determine what amount of the jobwork charges line item to include as
overhead expenses. See CS Wind III, 2015 WL 2167462, at *1–7; CS Wind Viet. Co. v. United
States, Slip Op. 14–128, 2014 WL 5510084, at *2, 6–7 (CIT Nov. 3, 2014) (“CS Wind
II”); Third Remand Results at 7–16.
The erection/civil income ratio sustained by this court in CS Wind III and remanded by
the Federal Circuit in CS Wind IV worked as follows. See CS Wind III, 2015 WL 2167462, at
*1–5. Commerce derived the ultimate (adjusted) erection/civil income ratio by combining an
1
“Erection expenses” are expenses “for setting up the tower on the foundation,” and “civil
expenses” are “payments for preparing the foundation on which to set a tower.” CS Wind IV,
832 F.3d at 1370. Together, these activities are referred to as “tower setup.” Id.
Court No. 13-00102 Page 5
unadjusted erection/civil income ratio with a “raw materials/direct labor exclusion ratio.” Id. at
*4 & n.5. The unadjusted erection/civil income ratio, defined as “a,” was:
EI + CI
a=
SOJW + EI + CI + SOFG + Scrap
Where EI = Erection Income, CI = Civil Income, SOJW = Sales of Jobwork, SOFG = Sales of
Finished Goods, and Scrap = Sales of Scrap. Id. at *4 n.5. The raw materials/direct labor
exclusion ratio, defined as “b” and derived from values in the expense side of the financial
statements, was:
RM + DL
b=1–
RM + DL + E + O
Where RM = Raw Materials, DL = Direct Labor, E = Energy, and O = Overhead. CS Wind III,
2015 WL 2167462 at *4 n.6; see also CS Wind IV, 832 F.3d at 1379 n.5 (explaining
Commerce’s methodology of excluding raw material and direct labor expenses from the
erection/civil income ratio). The adjusted erection/civil income ratio was:
b * EI + b * CI
a (adjusted) =
SOJW + b * EI + b * CI + b * SOFG + b * Scrap
CS Wind III, 2015 WL 2167462 at *4 n.7. Commerce’s erection/civil income ratio yielded a
percentage, 8.62%, which it then multiplied by the jobwork charges line item, subtracting the
resulting amount from the total value of the jobwork charges line item. Id. Commerce then
included the remaining portion of the jobwork charges line item in overhead expenses for use in
the surrogate financial ratios. Id.
In its Third Remand Results, Commerce has once again revised the erection/civil income
ratio, this time by: (1) eliminating Sales of Jobwork from the denominator of the erection/civil
income ratio, Third Remand Results at 8, 11; (2) removing Direct Labor from the numerator of
the raw materials/direct labor exclusion ratio, thus changing the raw materials/direct labor
Court No. 13-00102 Page 6
exclusion ratio to a “raw materials exclusion ratio,” id. at 8; (3) choosing to apply the raw
materials exclusion ratio only to Sales of Finished Goods and Scrap, id.; and (4) multiplying the
erection/civil income ratio by “Store and Spares” expenses and “In-House Labor” expenses 2 in
addition to the jobwork charges line item, and then subtracting the resulting amounts from
overhead expenses, id. at 7–8, 11. Thus, the new unadjusted erection/civil income ratio is:
EI + CI
a=
EI + CI + SOFG + Scrap
The new raw materials exclusion ratio is:
RM
b= 1–
RM + DL + E + O
And the new adjusted erection/civil income ratio is:
EI + CI
a (adjusted) =
EI + CI + b * SOFG + b * Scrap
The revised erection/civil income ratio resulted in a percentage of 26.42%, which, as discussed,
Commerce applied to the jobwork charges line item, In-House Labor expenses, and Store and
Spares expenses. Third Remand Results at 8, Analysis Mem. at Attach. 1. Due to the revisions
adopted in the Third Remand Results, the overhead and SG & A ratios lowered from 20.16% and
10.50% to 16.49% and 10.42%, respectively. See Third Remand Results at 11; Final
Redetermination Pursuant to Ct. Order 8, ECF No. 82 (“Second Remand Results”); Results of
Redetermination Pursuant to Ct. Order 18, ECF No. 57 (“First Remand Results”). In addition,
because of the Third Remand Results’s revisions, the antidumping duty margin on CS Wind’s
2
Commerce does not explicitly identify the line items it considers to constitute In-House Labor
expenses. Commerce apparently uses the term, however, to refer to the following expense items:
(1) “Salaries, Wages and Bonus”; (2) “Contribution to Provident and Other Fund”; and (3)
“Workmen and Staff Welfare Expenses.” See Analysis Mem. for Draft Results of
Redetermination at Attach. 1, PD 2 (Nov. 23, 2016) (“Analysis Mem.”) (listing items to which
Commerce applied the erection/civil income ratio).
Court No. 13-00102 Page 7
towers was reduced from 17.02% to 0.0%. See Third Remand Results at 20; Second Remand
Results at 8.
B. Solicitation of Information from Ganges
Presumably in an effort to avoid the need for Commerce’s complex methodology, the
Federal Circuit in CS Wind IV directed Commerce to say on remand whether Commerce has the
authority to seek clarifying information from a third party surrogate value company like Ganges.
832 F.3d at 1380. The Federal Circuit also requested Commerce, if it possesses authority to seek
such clarification, to “explain why it is reasonable to refrain from [doing so], generally or in this
particular matter.” Id. In its Third Remand Results, Commerce notes that it has the authority to
seek clarifying information from a third party surrogate value company like Ganges. Third
Remand Results at 12–13. But, Commerce states, it “maintains a practice of refraining from
‘peeking behind’ the underlying data of surrogate financial statements placed on the record by
interested parties[.]” Id. at 12. Commerce explains this position by saying that it cannot compel
responses from third parties, that it cannot ensure the timeliness or accuracy of responses, and
that dealing with the responses would be a burden and generally is not likely to result in valuable
data. Id. at 14–15. Thus, Commerce has not issued a questionnaire to Ganges seeking
clarification regarding its financial statements. Id. at 15–16.
III. Steel Plate Surrogate Value
In response to the solicitation by Commerce of comments on Commerce’s Draft Results
of Redetermination Pursuant to Court Order, PD 1 (Nov. 23, 2016) (“Draft Third Remand
Results”), WTTC encouraged Commerce to revise the surrogate value for steel plate consumed
by CS Wind because “information developed in the first administrative review conclusively
demonstrates that its surrogate value selection is simply wrong and based on material
Court No. 13-00102 Page 8
misstatements by CS Wind.” WTTC Cmts. at 24. 3 CS Wind submitted new Steel Guru India
(“Steel India”) data during the first administrative review in January of 2015. See Def.’s Resp.
to Cmts. on the Final Results of [Third] Redetermination 17, ECF No. 118 (“Gov’t Resp.”);
Decision Mem. for the Final Results of the 2013–2014 Administrative Review of the
Antidumping Duty Order on Utility Scale Wind Towers from the Socialist Republic of Vietnam
at 9 & n. 25, A-552-814, (Sept. 8, 2015), available at
http://enforcement.trade.gov/frn/summary/vietnam/2015-23155-1.pdf (last visited Mar. 2, 2017)
(“First AR I&D Memo”). CS Wind’s submission of new Steel India data occurred after the court
sustained Commerce’s selection of the original Steel India data over Global Trade Atlas
(“GTA”) import data in CS Wind II in November of 2014, but before WTTC submitted
comments in February of 2015 on Commerce’s Second Remand Results. See Def.-Intvr. Wind
Tower Trade Coalition’s Cmts. on Final Redetermination Pursuant to Ct. Order 1, ECF No. 85
(“WTTC Second Remand Results Cmts.”). No party opposed Commerce’s continued use of the
original Steel India data in the Second Remand Results, sustained by this court in CS Wind III,
or appealed the matter to the Federal Circuit in CS Wind IV. In the latest remand proceeding
Commerce refused to consider WTTC’s comment regarding steel plate surrogate value because
of its “unsolicited argument and factual information.” Rejection Letter at 1.
3
The court relies on WTTC’s characterization of its comment because, due to Commerce’s
rejection of the comment, the comment’s text was omitted from the record. See WTTC Cmts. on
Third Draft Results of Redetermination at Attach. 1, PD 9 (Dec. 7 2016) (“WTTC Draft Remand
Cmts.”) (lacking text of WTTC’s comment on steel plate surrogate value); Commerce Letter
Rejecting WTTC’s Original Cmts. on Draft Remand at 1, PD 7 (Dec. 5, 2016) (“Rejection
Letter”). In its rejection of the comment, however, Commerce similarly characterizes WTTC’s
comment as “provid[ing] information that [WTTC] stated pertains to the type of steel used to
produce wind towers.” Rejection Letter at 1.
Court No. 13-00102 Page 9
WTTC makes several arguments in opposition to the Third Remand Results. First,
WTTC contends that Commerce failed to adequately explain its decision to use the
manufacturer-reported weights instead of the packed weights in its calculations. WTTC Cmts. at
9–18. Second, WTTC argues that Commerce should have requested clarifying information from
Ganges regarding the jobwork charges line item. Id. at 18–23. Lastly, WTTC submits that
Commerce should have the opportunity to revise its surrogate value for CS Wind’s steel plate
input because the data used in the Third Remand Results is “wrong and based on material
misstatements by CS Wind.” Id. at 24–29. Commerce and CS Wind respond that the court
should sustain the Third Remand Results. Gov’t Resp. at 6–21; Pls.’ Cmts. on Remand Results
2–27, ECF No. 105 (“CS Wind Cmts.”).
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court upholds
Commerce’s redetermination in an antidumping investigation 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).
ANALYSIS
I. Weights Selection
WTTC argues that Commerce took the Federal Circuit’s “direct[ion]” to use the
manufacturer-reported weights in the normal value calculation “too literally.” WTTC Cmts. at
10. WTTC contends that the Federal Circuit cannot lawfully dictate a decision to Commerce,
and that Commerce should have been mindful of this purported principle when issuing its Third
Remand Results. Id. at 10–11. WTTC reasons that, because Commerce relied solely on the
Federal Circuit’s direction and this court’s accordant Remand Order in making its
Court No. 13-00102 Page 10
selection, Third Remand Results at 7, Commerce failed to adequately explain its weights
selection. WTTC Cmts. at 11–13. WTTC also repeats the merits of its case, detailing why the
packed weights are accurate. Id. at 13–18.
The government responds that Commerce correctly interpreted the Federal Circuit’s
opinion. Gov’t Resp. at 8. It argues that WTTC’s concern over the Federal Circuit’s instruction
is a dispute with the Federal Circuit, not Commerce, and notes that WTTC could have sought
further review of the Federal Circuit’s decision. Gov’t Resp. at 7–8. The government also states
that Commerce “reanalyzed the record evidence” on remand, and points to record evidence
supporting Commerce’s decision. Id. at 7–9. CS Wind, meanwhile, argues that the Federal
Circuit’s reversal of Commerce binds this court, citing for support both stare decisis and the law-
of-the-case doctrine, specifically, the mandate rule. CS Wind Cmts. at 3–4.
Because the Federal Circuit’s direction to Commerce bound Commerce under the
mandate rule to use the manufacturer-reported weights, Commerce’s reliance on that instruction
is an adequate explanation for Commerce’s choice. “Under the mandate rule, a court below [or
an agency4] must adhere to a matter decided in a prior appeal unless one of three ‘exceptional
circumstances’ exist[.]” 5 Banks v. United States, 741 F.3d 1268, 1276 (Fed. Cir. 2014). “[I]n
4
See Corus Staal BV v. U.S. Dep’t of Commerce, 27 CIT 1180, 1184 & n.9, 279 F. Supp. 2d
1363, 1368 & n.9 (2003).
5
The mandate rule applies here, which is part of the law-of-the-case doctrine, ArcelorMittal
France v. AK Steel Corp., 786 F.3d 885, 888 (Fed. Cir. 2015), rather than stare decisis. Whereas
stare decisis makes legal rules “binding in future cases,” the mandate rule applies only in
“ongoing case[s].” See Mendenhall v. Cedarapids, Inc., 5 F.3d 1557, 1570 (Fed. Cir. 1993)
(describing stare decisis); Dow Chem. Co. v. Nova Chems. Corp. (Canada), 803 F.3d 620, 627
(Fed. Cir. 2015) (explaining the mandate rule). Because the Federal Circuit’s ruling was part of
the present “ongoing case,” the mandate rule, not stare decisis, applies. The distinction matters
because the mandate rule contains exceptions, but stare decisis does not. See Hutto v. Davis, 454
(continued . . .)
Court No. 13-00102 Page 11
interpreting [the Federal Circuit’s] mandate, ‘both the letter and the spirit of the mandate must be
considered.’” TecSec, Inc. v. Int’l Bus. Machs. Corp., 731 F.3d 1336, 1342 (Fed. Cir. 2013)
(quoting Engel Indus., Inc. v. Lockformer Co., 166 F.3d 1379, 1383 (Fed. Cir. 1999)). In CS
Wind IV, the Federal Circuit unambiguously decided the matter of which weights Commerce
should use as the “best available information” under 19 U.S.C. § 1677b(c)(1). See 832 F.3d at
1374. The Federal Circuit not only “reverse[d] the Court of International Trade’s affirmance” of
Commerce’s selection of the packed weights, but also “direct[ed] Commerce to use the
manufacturer-reported weights in its calculation.” Id. Under the mandate rule, the Federal
Circuit’s decision on the matter of weights selection in the prior appeal of CS Wind IV binds
Commerce and this court unless an exception applies.6
The mandate rule applies unless: “(1) subsequent evidence presented at trial was
substantially different from the original evidence; (2) controlling authority has since made a
contrary and applicable decision of the law; or (3) the decision was clearly erroneous ‘and would
work a manifest injustice.’” Banks, 741 F.3d at 1276 (quoting Gindes v. United States, 740 F.2d
947, 950 (Fed. Cir. 1984)). Only the third exception arguably applies here. Cf. WTTC Cmts. at
9–12. If the Federal Circuit “clearly” had no authority to tell Commerce which weights to use,
U.S. 370, 375 (1982) (stating that lower courts are bound by stare decisis “no matter how
misguided the judges of those courts may think it to be”); Banks v. United States, 741 F.3d 1268,
1276 (Fed. Cir. 2014) (setting out exceptions to the mandate rule).
6
WTTC argues that precedent establishes that the Federal Circuit cannot instruct Commerce to
use a particular method over another, and that this precedent should have colored how
Commerce interpreted the Federal Circuit’s decision. WTTC Cmts. at 9–12. As discussed,
however, the Federal Circuit’s direction does not contain any ambiguity. Furthermore, the “spirit
of the mandate” must be considered in addition to the mandate’s “letter” when interpreting the
mandate, and given the Federal Circuit’s reference to the manufacturer-reported weights in its
“direct[ion],” that spirit is clearly for Commerce to use the manufacturer-reported weights. See
TecSec, Inc., 731 F.3d at 1342. In addition, as discussed below, it is not established that the
Federal Circuit can never tell Commerce which method to use.
Court No. 13-00102 Page 12
either because the Federal Circuit can never do so or because it lacked authority in this case, the
Federal Circuit’s “direct[ion]” might arguably be “clearly erroneous.” But as explained in Jane
Restani & Ira Bloom, The Nippon Quagmire: Article III Courts and Finality of United States
Court of International Trade Decisions, 39 BROOK. J. INT’L L. 1005, 1008, 1025 (2014), the
statute cited by WTTC, 19 U.S.C. § 1516a(c)(3), which requires the Court of International Trade
(“CIT”) to either affirm or remand an agency determination, does not support WTTC’s
contention. In this context remand is a procedural device to implement a contrary judicial
decision. The remand may be as open or as restricted as necessary to effectuate the decision.
Sometimes, as in this case, the Federal Circuit decision is effectively a reversal of a particular
Commerce determination and concomitantly the CIT was required to order the same reversal in
ordering remand for the necessary replacement calculations.
Neither case law nor statute “clearly” establishes that the Federal Circuit can never order
Commerce to select a particular method over another. Here, the Federal Circuit took the
somewhat unusual step of choosing between two data sets and directing Commerce to use one
set and not the other. In other words, it found the use of only one set supported by substantial
evidence. Having made that decision, the next step was to direct the use of the one set still
available. WTTC takes issue with the data set choice, as Commerce still does, at least for the
record, but the Federal Circuit has spoken. WTTC may not argue, with any authority, for the
court to ignore this clear direction. Yes, once having found Commerce’s choice unsupported, the
Federal Circuit could have ordered a more open remand to let Commerce further consider its
choice or even reopen the record, but there is nothing before the court that indicates such steps
would have been useful given the Federal Circuit’s decision that the record evidence did not
support Commerce’s choice of data. Commerce’s explanations were made and rejected and
Court No. 13-00102 Page 13
there is no additional data set offered. Unfair trade records involve so many different kinds of
decisions that there is no never that per se prevents any particular type of remand direction.
If the record reveals basically two choices, direction to choose one is a rational direction
and helps to avoid multiple remands and leads to finality of judicial decisions. See generally
Restani & Bloom, supra. Because the mandate rule applies and required Commerce to obey the
Federal Circuit, Commerce’s explanation of its rationale for selecting the manufacturer-reported
weights as the “best available information” is adequate. 7
II. Financial Ratios
A. Erection/Civil Income Ratio
No party directly challenges Commerce’s revised erection/civil income ratio
methodology or Commerce’s explanations of it. 8 As there is no challenge, the court will not sua
sponte analyze Commerce’s choice of methodology for reasonableness or substantial evidence.
The parties have waived their right to challenge the erection/civil income ratio calculation
methodology by failing to raise before the court any issue with Commerce’s methodology or its
underlying justifications. See Gilda Indus., Inc. v. United States, 446 F.3d 1271, 1280 (Fed. Cir.
2006) (explaining that failure to raise an issue before a court results in waiver).
7
The court does not reach the government’s argument that Commerce “reanalyzed the record
evidence” on remand. Gov’t Resp. at 7–9. The court notes, however, that Commerce did not
include evidence of any such reanalysis in its Third Remand Results, relying instead on the
Federal Circuit’s “direct[ion].” Third Remand Results at 7.
8
In its comments on Commerce’s Draft Third Remand Results WTTC stated that Commerce
should have further explained its calculations. WTTC Draft Remand Cmts. at Attach. 1. It did
not make the argument before the court.
Court No. 13-00102 Page 14
B. Solicitation of Information from Ganges
As indicated, no party directly challenges the erection/civil income ratio calculation
methodology that Commerce utilized as unreasonable or unsupported by substantial evidence of
record, rather WTTC argues that Commerce’s failure to request information from Ganges
“regarding how [Ganges] classifies its jobwork expenses” is an abuse of discretion because
Commerce could, with little burden, request such clarification. WTTC Cmts. at 18–23. 9
Presumably, WTTC believes such information might simplify the surrogate financial ratio
calculations or otherwise result in changes to its benefit. Thus, WTTC challenges Commerce’s
“per se rule” of refusing to inquire about a third party surrogate value company’s financial
statements. Id. at 20–22. The government responds that Commerce does not have a per se rule
against requesting information from third party surrogate value companies, Gov’t Resp. at 16,
but acknowledges that Commerce has a “longstanding practice” of not doing so, id. at 10. The
government also argues that Commerce’s practice, and its application of that practice here, is not
an abuse of discretion because Commerce cannot compel the submission of information from
third parties, cannot ensure the timeliness or accuracy of the information, and because requesting
and incorporating the information is “time-consuming and resource-intensive.” Id. at 11–13. CS
Wind defends Commerce for the same reasons as the government does, CS Wind Cmts. at 18–
27, and also argues that WTTC should be judicially estopped from making its arguments because
of WTTC’s “180 degree flip flop.” Id. at 26. 10
9
Commerce’s refusal to seek information from a party is reviewed for abuse of discretion. See
Wuhu Fenglian Co. v. United States, 836 F. Supp. 2d 1398, 1405 (CIT 2012) (applying abuse of
discretion standard to review of Commerce’s refusal to issue supplemental questionnaires).
10
Because the Federal Circuit directed Commerce to address this issue, see CS Wind IV, 832
F.3d at 1380, the court analyzes whether Commerce abused its discretion in refusing to seek
(continued . . .)
Court No. 13-00102 Page 15
Commerce has the authority to request information from a third party surrogate value
company. See 19 C.F.R. § 351.301(a) (“[T]he Secretary may request any person to submit
factual information at any time during a proceeding or provide additional opportunities to submit
factual information.”); 19 C.F.R. § 351.102(37) (defining “person” as “any interested party as
well as any other . . . enterprise, or entity”) (emphasis added); Third Remand Results at 13
(acknowledging Commerce’s authority to make such requests). In addition, Commerce may
specify a due date for supplemental questionnaires. 19 C.F.R. § 351.301(c)(1)(ii)
(“Supplemental questionnaire responses are due on the date specified by the Secretary.”). 11
Furthermore, Commerce apparently possesses the authority to verify surrogate value data. See
19 C.F.R. § 351.307(b)(2) (“The Secretary may verify factual information upon which the
Secretary relies in a proceeding . . . not specifically provided for in paragraph (b)(1) of this
section.”). Commerce is not required, however, to verify publicly available surrogate value
data. See Timken Co. v. United States, 12 CIT 955, 961, 699 F. Supp. 300, 305 (1998)
(concluding that it is “permissible for Commerce to employ unverified data from the designated
surrogate as the ‘best information otherwise available’”). Lastly, Commerce’s ability to apply
adverse inferences to information under 19 U.S.C. § 1677e(b)(1) applies only to information
submitted by interested parties, not by third parties, and unlike the International Trade
clarifying information from Ganges, regardless of any change in WTTC’s position. The Federal
Circuit has the discretion to waive WTTC’s waiver of this issue in the earlier proceedings before
Commerce and the CIT. The court assumes the Federal Circuit has waived this default and this
court must accept this result.
11
Commerce states in its Third Remand Results that it “has no authority to compel a non-
interested party to respond within the government’s regulatory or statutory deadlines.” Third
Remand Results at 14 (citing 19 C.F.R § 351.301). Commerce does lack the authority to compel
a timely response from a third party. 19 C.F.R. § 351.301 appears to give Commerce the
authority to set a time limit for such factual submissions, but it has no remedies to impose on
third parties for failure to comply.
Court No. 13-00102 Page 16
Commission (“ITC”), Commerce does not have subpoena power over nonparties. See 19 C.F.R.
§ 210.32 (setting out the ITC’s subpoena authority); Allegheny Ludlum Corp. v. United States,
287 F.3d 1365, 1372 (Fed. Cir. 2002) (“[T]he Commission possesses the authority to issue
subpoenas in pursuing its investigations, unlike Commerce . . . .”).
Commerce has not abused its discretion in maintaining a practice of generally not seeking
clarifying information from surrogate value companies, or by declining to do so in this case. As
WTTC points out, the burden on Commerce of drafting a clarification letter to Ganges is likely
fairly low. WTTC Cmts. at 19. But, Commerce cannot “compel” a timely or accurate response
from Ganges, or any other third party, by applying adverse inferences to its use of facts
otherwise available or by using subpoena power. See 19 U.S.C. § 1677e(b)(1); 19 C.F.R.
§ 210.32; Allegheny Ludlum, 287 F.3d at 1372. Although Commerce appears to have the
authority to verify a response as accurate, see 19 C.F.R. § 351.307(b)(2), the verification process
generally entails a significant burden on Commerce and the responder may choose not to allow
verification. Absent the ability to obtain with some assurance a timely and accurate response,
and given the significant burden Commerce would incur in attempting to obtain accurate
information (which attempts would seem to have a high probability of failure) Commerce did not
abuse its discretion in deciding not to send a letter to Ganges, or in maintaining a practice of
generally not requesting information from third party surrogate value companies over whom it
has no control. 12 As the court sustains Commerce’s decision to rely on publicly available
information, WTTC’s only challenge to the surrogate financial ratio results fails.
12
The court does not read Commerce’s statement that it “does not, as a matter of course,
independently request supplemental information directly from the surrogate companies with
respect to publicly available sources of surrogate values,” Third Remand Results at 14, to mean
(continued . . .)
Court No. 13-00102 Page 17
III. Steel Surrogate Value
WTTC argues that Commerce should not have rejected WTTC’s comment on the Draft
Third Remand Results regarding Commerce’s use of Steel India data as the surrogate value for
CS Wind’s steel plate input. WTTC Cmts. at 24–29. WTTC argues that information developed
in the first administrative review shows that CS Wind made material misstatements regarding the
accuracy of the Steel India data used by Commerce in the original investigation, and that the
Steel India data used in the original investigation 13 “does not accurately reflect the steel
consumed in the production of CS Wind’s wind towers.” 14 Id. at 24, 26–28. WTTC contends
that Commerce has a duty to use information from a later review that significantly detracts from
the legitimacy of a prior proceeding to protect the integrity of the proceedings. Id. at 24–25.
Accordingly, WTTC seeks a remand from the court to give Commerce an opportunity to
recalculate CS Wind’s dumping margins. Id. at 29. The government responds that: (1) WTTC
waived its contest of Commerce’s use of the original Steel India data by failing to raise it on
appeal to the Federal Circuit in CS Wind IV, Gov’t Resp. at 17; (2) WTTC is trying to submit
unsolicited new factual information, which Commerce refuses to consider under 19 C.F.R.
§ 351.302(d), id. at 18; (3) remanding would be inconsistent with the principles of the
independence and finality of an antidumping proceeding, id. at 18–19; and (4) Commerce is
that Commerce has a “per se rule” against seeking such information. See WTTC Cmts. at 21
(citing Third Remand Results at 14). Instead, the court understands Commerce to mean that
Commerce generally does not do so, because it is simply unlikely to result in valuable
information.
13
The original Steel India data reflects prices for IS2062 grade steel. CS Wind II, 2014 WL
5510084, at *2.
14
CS Wind consumes S355 grade steel. CS Wind, 2014 WL 5510084, at *2; WTTC Cmts. at
27.
Court No. 13-00102 Page 18
required to re-open the record only in the case of “material fraud,” which is absent here, id. at
19–20.
Commerce’s rejection of unsolicited factual information in remand determinations is
reviewed for abuse of discretion. See Cultivos Miramonte S.A. v. United States, 22 CIT 377,
380–81, 7 F. Supp. 2d 989, 993 (1998). In exercising its discretion, Commerce may consider
finality interests, the extent of any inaccuracies in the earlier proceedings, the existence of any
fraud, the strength of evidence for fraud, and the fraud’s materiality. See Home Prods. Int’l, Inc.
v. United States, 633 F.3d 1369, 1381 (Fed. Cir. 2011). 15
Here, Commerce did not abuse its discretion in rejecting WTTC’s unsolicited factual
information. Crucially, WTTC fails to identify facts in the record indicative of fraud or
“material misstatements” by CS Wind. In arguing that CS Wind made “material misstatements,”
WTTC points to CS Wind’s purported “admission that the Steel [India] data [used in the original
investigation] does not reflect the steel it consumes to produce wind towers.” WTTC Cmts. at
26. WTTC finds this “admission” implicit in CS Wind’s submission of new Steel India data
during the first administrative review. Id. at 28. 16 WTTC does not explain, however, why CS
Wind’s submission of new Steel India data in the first administrative proceeding necessarily
15
The regulations relied on by the government to argue that Commerce has the authority to reject
unsolicited factual information, 19 C.F.R. § 351.302(d) and 19 C.F.R. § 351.104(a)(2)(iii), are
not controlling here because they apply only to unsolicited questionnaire responses, and WTTC’s
comment on the Draft Third Remand Results is not a questionnaire response.
16
WTTC does not specifically identify what this new Steel India data is. It appears, however,
that the new data is simply more specific IS2062 grade data—IS2062 E350 B0/BR/C for the
period of review of the first administrative review, rather than the IS2062 E250 Grade A/B data
used in the original investigation. See First AR I&D Memo at 6. In the first administrative
review, WTTC again argued that Commerce should use GTA import data, but Commerce
selected the new Steel India data as the best available information. Id. at 5, 7, 12, 14.
Court No. 13-00102 Page 19
entails a “material misstatement” by CS Wind in the original investigation, as opposed to, for
instance, a simple update of data.
In addition, WTTC fails to explain the extent of any inaccuracy caused by Commerce’s
refusal to reconsider its original surrogate value data for steel plate in the original investigation
in the light of the new Steel India data from the first administrative review. The mere fact that
Commerce uses different data in different proceedings is insufficient for the court to disturb
Commerce’s continued use of the original Steel India data in the original
investigation. See Qingdao Sea-Line Trading Co. v. United States, 766 F.3d 1378, 1387 (Fed.
Cir. 2014) (“[E]ach administrative review is a separate exercise of Commerce’s authority that
allows for different conclusions based on different facts in the record.”). In view of the lack of
evidence of “material misstatements” by CS Wind or significant inaccuracies, and recognizing
the need for finality in administrative proceedings, the court concludes that Commerce did not
abuse its discretion in rejecting WTTC’s unsolicited comment.
Furthermore, WTTC forewent opportunities to challenge the original Steel India data
used by Commerce in the original investigation. CS Wind submitted the new Steel India data
cited by WTTC in a separate proceeding in January of 2015. Gov’t Resp. at 17; First AR I&D
Memo at 9 n.25. In February of 2015, WTTC filed comments to Commerce’s Second Remand
Results in this matter following the court’s affirmance in CS Wind II of Commerce’s use of the
original Steel India data, but did not raise the issue of new Steel India data. See generally WTTC
Second Remand Results Cmts. Neither did WTTC note any concerns raised by the new data
before this court in CS Wind III, nor did it do so before the Federal Circuit in CS Wind IV. It is
far too late to resurrect this abandoned issue. Thus, Commerce did not abuse its discretion in
rejecting WTTC’s unsolicited submission in the latest remand proceedings.
Court No. 13-00102 Page 20
CONCLUSION
For the foregoing reasons, Commerce’s Third Remand Results are sustained. Judgment
will enter accordingly.
/s/ Jane A. Restani
Jane A. Restani
Judge
Dated: March 16, 2017
New York, New York