                                         Slip Op. 15-38

               UNITED STATES COURT OF INTERNATIONAL TRADE


 ZHEJIANG SANHUA CO., LTD,

                            Plaintiff,
                                                          Before: Leo M. Gordon, Judge
                     v.
                                                          Court No. 14-00007
 UNITED STATES,

                            Defendant.


                                           OPINION

[Motion for judgment on the agency record denied; final results of administrative review
sustained.]

                                                                       Dated: April 24, 2015

        David A. Riggle and David J. Craven, Riggle and Craven of Chicago, Illinois for
Plaintiff Zhejiang Sanhua Co., Ltd.

       L. Misha Preheim, Senior Trial Counsel, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice of Washington, DC for Defendant United States.
With him on the brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne
E. Davidson, Director, Patricia M. McCarthy, Assistant Director. Of counsel on the brief
was Devin S. Sikes, Attorney, U.S. Department of Commerce for Trade Enforcement and
Compliance of Washington, DC.

      Gordon, Judge: This action involves an administrative review conducted by the

U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering

frontseating service valves from the People’s Republic of China. See Frontseating

Service Valves from the People’s Republic of China, 78 Fed. Reg. 73,825 (Dep’t of

Commerce Dec. 9, 2013) (final results admin. review) (“Final Results”); see also Issues

and Decision Memorandum for the Final Results of the Antidumping Duty Administrative

Review on Frontseating Service Valves from the People’s Republic of China, A-570-933
Court No. 14-00007                                                                Page 2


(Dep’t of Commerce Nov. 29, 2013) (“Decision Memorandum”), available at

http://enforcement.trade.gov/frn/summary/prc/2013-29333-1.pdf (last visited this date).

Before the court is Plaintiff Zhejiang Sanhua Co., Ltd.’s (“Sanhua”) motion for judgment

on the agency record. See Pl.’s Rule 56.2 Mem. in Supp. of Mot. for J. on the Agency R.

(July 31, 2014), ECF No. 24 (“Pl.’s Br.”). The court has jurisdiction pursuant to Section

516A(a)(2)(B)(iii) of Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii)

(2012),1 and 28 U.S.C. § 1581(c) (2012).

       Sanhua challenges Commerce’s use of facts available to calculate Sanhua’s brass

and copper byproduct offsets, Commerce’s rejection of Sanhua’s ministerial error

submission, and Commerce’s 15-day liquidation policy. For the reasons set forth below,

the court sustains the Final Results on each issue.

                                 I. Standard of Review

       For administrative reviews of antidumping duty orders, the court sustains

Commerce’s “determinations, findings, or conclusions” 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). More specifically, when reviewing agency determinations, findings,

or conclusions for substantial evidence, the court assesses whether the agency action is

reasonable given the record as a whole. Nippon Steel Corp. v. United States, 458 F.3d

1345, 1350-51 (Fed. Cir. 2006). Substantial evidence has been described as “such

relevant evidence as a reasonable mind might accept as adequate to support a



1
 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2012 edition.
Court No. 14-00007                                                              Page 3


conclusion.” DuPont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed. Cir.

2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)). Substantial

evidence has also been described as “something less than the weight of the evidence,

and the possibility of drawing two inconsistent conclusions from the evidence does not

prevent an administrative agency’s finding from being supported by substantial evidence.”

Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966). Fundamentally, though,

“substantial evidence” is best understood as a word formula connoting reasonableness

review. 3 Charles H. Koch, Jr., Administrative Law and Practice § 9.24[1] (3d ed. 2015).

Therefore, when addressing a substantial evidence issue raised by a party, the court

analyzes whether the challenged agency action “was reasonable given the circumstances

presented by the whole record.” Edward D. Re, Bernard J. Babb, and Susan M. Koplin,

8 West’s Fed. Forms, National Courts § 13342 (2d ed. 2014).

      Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural

Res. Def. Council, Inc., 467 U.S. 837, 842-45 (1984), governs judicial review of

Commerce’s interpretation of the antidumping statute. See United States v. Eurodif S.A.,

555 U.S. 305, 316 (2009) (Commerce’s “interpretation governs in the absence of

unambiguous statutory language to the contrary or unreasonable resolution of language

that is ambiguous.”).

                                     II. Discussion

                                  A. Facts Available

      Commerce calculates dumping margins by determining “the amount by which the

normal value exceeds the export price or constructed export price of the subject
Court No. 14-00007                                                                Page 4


merchandise.” 19 U.S.C. § 1677(35)(A). The statute permits certain downward

adjustments to normal value, but does not address adjustments for byproduct sales. See

id. § 1677b(a)(6)-(7). Commerce as a matter of policy, however, offsets normal value for

the sale of byproducts generated during production of the subject merchandise during the

period of review. See, e.g., Issues and Decision Memorandum for the Final Results of

Antidumping Duty Administrative Review and New Shipper Review of Wooden Bedroom

Furniture from the People's Republic of China, A-570-890, at 70-71 (Dep’t of Commerce

Aug. 11, 2008), available at http://enforcement.trade.gov/frn/summary/prc/E8-19303-

1.pdf (last visited this date) (describing and applying scrap offset policy).

       Sanhua sold brass and copper scrap during the period of review. Sanhua, though,

did not track the quantity of scrap generated on a product-specific basis. Instead, in

response to Commerce’s request for product-specific figures, Sanhua reported brass and

copper byproduct using a formula that extrapolated product-specific data from total scrap

sales. As Commerce explained:

       Sanhua first calculated the sum of [the weight of] all reported [factors of
       production] for each [frontseating service valve, or FSV] which includes
       [factors of production] related to components not manufactured from brass
       or copper (e.g., nylon charge port caps). Sanhua then subtracted the total
       standard weight of each finished FSV from the sum of the [factors of
       production] for that FSV to determine each FSV’s “difference.” Next,
       Sanhua [multiplied] each FSV’s “difference” by its [period of review]
       production quantity and summed the [results of that calculation for] all FSVs
       produced to determine the total “difference.” Sanhua then divided the total
       weight of brass and copper scrap generated and sold during the [period of
       review] by the extended “difference” to determine the ratio of scrap [in
       grams] to difference [in grams]. Sanhua applied the brass and copper ratios
       to each FSV’s “difference” to determine the FSV’s brass and copper scrap
       offset.
Court No. 14-00007                                                                 Page 5


Decision Memorandum at 21 (footnotes omitted). In other words, Sanhua calculated the

difference in weight between the inputs before production of each valve and the standard

final weight of each valve to estimate the weight of material lost during production. Sanhua

then applied a ratio derived from the total weight of scrap it actually sold to approximate

the portion of scrap metal in the total material lost during production. Sanhua’s

methodology resulted in estimated weights of brass and copper scrap on a product-

specific basis. See id.

       Commerce identified several potential problems with Sanhua’s methodology.

Decision Memorandum at 21-22. For example, Commerce observed that Sanhua’s

method depended in part on the weight of components “that bear[] no relationship to the

scrap offset being claimed,” and that Sanhua’s method derives copper offsets in part from

the amount of brass used in the production of some products. Id. Commerce noted that

Sanhua in some instances claimed an offset even though it reported a total input weight

lower than the final product weight. Most importantly, Commerce also observed that

Sanhua’s methodology did not account for “yield loss,” the percentage of inputs neither

incorporated into the final product nor recovered and sold as scrap. Commerce’s

concerns were confirmed at verification, finding “for most of the products examined” that

Sanhua’s method “resulted in higher scrap offsets than the yields reflected in the technical

drawings of the components made of brass or copper inputs.” Decision Memorandum at

22 (emphasis added).

       Commerce turned to “facts available” to address the problems it identified with

Sanhua’s reported brass and copper offsets. The statute requires Commerce to use facts
Court No. 14-00007                                                                 Page 6


otherwise available when, among other things, an interested party provides information

that cannot be verified. 19 U.S.C. § 1677e(a)(2)(D). Under this scenario, “Commerce may

use as ‘facts available’ any ‘information or inferences which are reasonable to use under

the circumstances’ to make the applicable determination or substitute for the missing

information.” Ningbo Dafa Chem. Fiber Co. v. United States, 580 F.3d 1247, 1252 (Fed.

Cir. 2009) (quoting Statement of Administrative Action, H.R. Rep. No. 103-316, vol. 1 at

869 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4198).

       Using other information available on the record, Commerce applied an adjustment

to Sanhua’s reported offsets to account for yield loss:

       To calculate the scrap adjustment for the final results, we summed the over-
       and under-reported brass and copper scrap offset quantities for all products
       examined at verification and divided this amount by the total reported brass
       and copper scrap offset for the same products to determine the overall over-
       or under-reported brass and copper scrap offset percentage of adjustment.
       We then applied this percentage adjustment to the CONNUM-specific brass
       and copper scrap offset quantities to determine the CONNUM-specific
       scrap adjustment. . . . [W]e find, as facts available, that this adjustment
       reasonably limits the brass and copper offset to the yield losses attributable
       to only those components produced using brass and copper inputs. We find
       that this approach is not adverse to Sanhua because it acknowledges that
       scrap is generated in the production of FSV and permits an offset and it
       includes both over- and underreported scrap amounts. We also find this
       adjustment to be reasonable because it is calculated based on the
       weighted-average over- and under-reported quantities of each product
       examined and represents both subject and non-subject merchandise.

Decision Memorandum at 23-24 (footnote omitted). Commerce noted, however, that “this

adjustment does not resolve all of the Department’s concerns with Sanhua’s scrap

allocation methodology.” Id. at 23.
Court No. 14-00007                                                              Page 7


       Sanhua requested that Commerce alter this methodology to account for scrap

derived from damaged and purchased components. Commerce declined, explaining that

“the brass and copper consumed in the production of the damaged components or

products or the quantity of purchased components is not included in Sanhua’s reported

brass, copper, or purchased components [factors of production],” meaning that “the scrap

generated from the damaged components or products was not generated from the

production of the subject merchandise.” Id. at 22-23. Commerce further explained that

Sanhua’s claimed offsets should actually be revised downward to exclude this scrap.

However, Commerce was unable to make this downward adjustment because “the

documentation regarding the number of pieces and related weights of damaged

components is not available on the record” and that “documentation collected at

verification reflects the number of pieces of damaged products, but not the corresponding

product weights.” Id. at 23 n.136.

       Sanhua argues that Commerce’s scrap offset calculation unreasonably failed to

“take into account all the factors that generate scrap, caused distortions[,] and was not

supported by company records.” Pl.’s Br. at 4. Specifically, Sanhua contends that

Commerce unreasonably relied on the full standard input and output weight described in

certain technical drawings when calculating the yield loss adjustment. According to

Sanhua, the “standard” product weights described in the drawings are theoretical

maximum weights. Id. at 4-5. Sanhua insists that actual weight “normally is less [than

standard product weight] due to experience and greater efficiency in manufacturing during

the product lifetime,” a fact confirmed by Commerce’s own findings of lower product
Court No. 14-00007                                                               Page 8


weights at verification. Id. at 5. Sanhua points to record data showing that Commerce’s

use of standard product weights in its adjustment formula results in lower scrap offsets.

Id. at 4-5. Sanhua also argues that Commerce’s methodology unreasonably fails to

account for scrap derived from inputs that Sanhua purchased. Sanhua in particular

objects to Commerce’s refusal to include purchased “damaged connection tubes” in its

adjustment to copper offsets because these tubes constitute “the most significant source

of copper scrap.” Id. at 7.

       Sanhua does not offer a specific alternative to Commerce’s adjustment

methodology. Instead, Sanhua argues that Commerce should have accepted Sanhua’s

unadjusted offset requests because Sanhua’s methodology “ties to the company’s own

internal records” instead of some “theoretical calculation.” Id.

       Defendant responds generally that Commerce reasonably used facts available to

adjust Sanhua’s offset reporting. Defendant explains that Commerce requested scrap

offset data on a product-specific basis, but that Sanhua did not maintain that information

in the normal course of business. Def.’s Resp. to Pl.’s Mot. for J. upon the Admin. R. 12

(Sept. 30, 2014), ECF No. 25 (“Def.’s Resp.”). According to Defendant, Sanhua’s claim

that its offset reporting “is based on its normal books and records” is misleading because

Sanhua’s methodology derives offset values indirectly. Id. at 13-14.

                                         Analysis

       Sanhua essentially argues that Commerce introduced inaccuracies into Sanhua’s

offset reporting that did not exist before. See Pl.’s Br. at 4-7. Sanhua had to calculate

product-specific offsets indirectly because Sanhua did not record its brass and copper
Court No. 14-00007                                                              Page 9


byproduct on a product-specific basis. In fairness, Sanhua’s methodology does tie to the

amount of total scrap it produced, a data point Sanhua maintained in the normal course

of business. Decision Memorandum at 21. As Commerce explained, however, Sanhua’s

scrap reporting methodology implied certain relationships between inputs, scrap

production, and the subject merchandise that Commerce could not verify. In particular,

Sanhua’s formula derived offsets in part from inputs unrelated to scrap, potentially

overstated the amount of copper scrap produced for certain models, and did not reflect

differences in production yields between models. Decision Memorandum at 21-22.

Commerce at verification observed that Sanhua’s formula in fact produced “higher scrap

offsets than the yields reflected in the technical drawings of the components made of

brass or copper inputs” for “most” of the products evaluated by Commerce. Id. at 22.

Sanhua does not present a cogent rebuttal to these findings.

      Commerce must use facts available when a party provides information that

Commerce cannot verify. 19 U.S.C. § 1677e(a)(2)(D); Decision Memorandum at 21-22.

Sanhua does not challenge Commerce’s application of facts available or identify any

verifiable alternative adjustment methodology. In the court’s view, Commerce analyzed

the available record information and reasonably adjusted Sanhua’s offset reporting

methodology. The court therefore sustains this aspect of the Final Results.

                           B. Ministerial Error Submission

      Sanhua submitted a ministerial error request soon after Commerce issued the

Final Results. Sanhua attached an exhibit to that submission containing information

related to the surrogate value for brass scrap. Commerce rejected Sanhua’s submission
Court No. 14-00007                                                                   Page 10


because three pages of the exhibit contained “new” information. Specifically, Commerce

observed that “Page 1 of exhibit ME-2 includes the Department's surrogate value . . .

worksheet for [a prior administrative] review,” and that “Pages 3 and 4 of exhibit ME-2

include import statistics for brass scrap from the Philippines National Statistics Office” not

part of the original administrative record. Rejection of New Factual Information Contained

in Zhejiang Sanhua Co., Ltd.’s December 9, 2013, Ministerial Error Letter, 1 (Dep’t of

Commerce Dec. 16, 2013), PD 130 (“Rejection Memorandum”). Commerce provided

Sanhua with an opportunity to resubmit its request without the three offending pages. Id.

at 1-2. Sanhua did so, but Commerce ultimately denied the entirety of Sanhua’s request

for ministerial error corrections. Ministerial Error Allegation Memorandum, 1-4 (Dep’t of

Commerce Jan. 9, 2014), PD 136 (“Error Memorandum”). Sanhua now challenges

Commerce’s decision to reject the three pages attached to its initial ministerial error

submission because, in Sanhua’s view, those three pages did not contain “new”

information. Pl.’s Br. at 9-12.

       The court does not agree. Sanhua insists the rejected pages do not contain “new”

information because the first page contains “the sort of information [Commerce] routinely

allows to be placed on the record” and the other two pages contain information already

on this record “in a different format” or using “a different unit of measure.” Id. at 10-11. By

Sanhua’s own admission, however, the information on the first rejected page came from

the record of a prior administrative review, not this administrative review. See id. at 10.

Furthermore, the other two pages do not contain information differing merely in format or

unit of measure. Instead, as Defendant explains, the two other pages contain information
Court No. 14-00007                                                                  Page 11


that differs in substance from what appears on this administrative record. Def.’s Resp. at

24-25 (citing and describing relevant record sources). Commerce reasonably concluded

that the three pages contained “new” information that did not warrant consideration as

part of Plaintiff’s request for a ministerial error correction. See Rejection Memorandum at

1-2.

       It seems that this issue is less about a genuine attempt to correct a ministerial error

and more an effort to reargue the substantive merits of a surrogate value determination.

Sanhua claimed in its submission that Commerce inadvertently valued brass scrap using

dollars per kilogram (excluding freight and insurance) instead of dollars per net kilogram

(including freight and insurance). Commerce, though, calculated a surrogate value for

brass scrap using a methodology that Sanhua itself suggested during the proceeding.

See Error Memorandum at 2-3; Decision Memorandum at 32-33. In persuading

Commerce to utilize its preferred methodology, it appears Sanhua neglected to develop

the record so that Commerce could value brass scrap in dollars per net kilogram. See

Error Memorandum at 3 (“The Department did not choose a [surrogate value] measured

in net kilograms, because no such value was timely filed on the record of this review.”). It

therefore appears to the court that this issue is not really about a ministerial error, but

instead reflects Sanhua’s untimely attempt to paper the record with missing information

that would have enabled Commerce to calculate a more favorable surrogate value for

brass scrap. In any event Commerce’s denial of Sanhua’s ministerial error request was

reasonable on this administrative record.
Court No. 14-00007                                                                 Page 12


                             C. Commerce’s 15-day policy

       Lastly, Sanhua challenges Commerce’s 15-day liquidation policy. Sanhua argues

that SKF USA, Inc. v. United States, 33 CIT 1866, 1883-91, 675 F. Supp. 2d 1264, 1280-

86 (2009), after remand, 34 CIT ___, Slip Op. 10-76 (2010) (“SKF II”), and Tianjin Mach.

Imp. & Exp. Corp. v. United States, 28 CIT 1635, 1649-51, 353 F. Supp. 2d 1294, 1309-

10 (2004) (“Tianjin”) render Commerce’s 15-day liquidation policy unlawful. Pl.’s Br. at

12-14. Defendant responds that the court lacks jurisdiction to review this issue because

the court cannot review the liquidation policy under 28 U.S.C. § 1581(c) and because

Sanhua does not have standing to challenge the policy. Alternatively, Defendant argues

that Commerce’s 15-day policy is a reasonable interpretation of the statute. Def.’s Resp.

at 25-31.

       Whether the court has subject matter jurisdiction to hear Plaintiff’s challenge to

Commerce’s 15-day liquidation policy is an academic exercise. If Plaintiff’s claim arises

out of the final results of the subject administrative review, then jurisdiction exists under

28 U.S.C. § 1581(c). See Mittal Steel Galati S.A. v. United States, 31 CIT 730, 736, 491

F. Supp. 2d 1273, 1279-80 (2007) (“Mittal Steel I”). On the other hand, if Plaintiff’s claim

arises from agency action outside of the final results of the subject administrative review,

then jurisdiction lies under 28 U.S.C. § 1581(i). See SKF USA Inc. v. United States, 31

CIT 405, 409-10 (2007) (“SKF I”). Regardless, the court has subject matter jurisdiction.

See Mittal Steel I, 31 CIT at 736, 491 F. Supp. 2d at 1280. Here, the court exercises its

jurisdiction to hear Plaintiff’s challenge to Commerce’s 15-day liquidation policy under

§ 1581(i). As to standing, the court sees no merit in the Government’s argument. See
Court No. 14-00007                                                                  Page 13


SKF II, 33 CIT at 1885-86, 675 F. Supp. 2d at 1281-82 (rejecting similar arguments). Even

though it has jurisdiction over Plaintiff’s claim, the court does not reach the merits on this

issue because Sanhua’s briefing on this issue is incomplete and inadequate.

       Sanhua believes that naked citation to SKF II and Tianjin entitles it to declaratory

relief as a matter of law. Sanhua, however, omits from its discussion several other

decisions of the court that sustained Commerce’s previous 15-day liquidation policy as a

reasonable interpretation of the statute. See Mittal Steel Galati S.A. v. United States, 31

CIT 1121, 1141, 502 F. Supp. 2d 1295, 1313, after remand 31 CIT 1776, 521 F. Supp.

2d 1409 (2007); Mittal Steel I, 31 CIT at 736, 491 F. Supp. 2d at 1279 (Gordon, J.);

Mukand Int’l Ltd. v. United States, 30 CIT 1309, 1312, 452 F. Supp. 2d 1329, 1332 (2006)

(Gordon, J.).

       The premise of the adversarial system is that courts do not sit as self-directed

boards of legal inquiry and research, but instead as arbiters of legal questions presented

and argued by the parties. See Carducci v. Regan, 714 F.2d 171, 177 (D.C. Cir. 1983);

MTZ Polyfilms, Ltd. v. United States, 33 CIT 1575, 1578-79, 659 F. Supp. 2d 1303, 1308-

09 (2009) (explaining applicability of Carducci and waiver for inadequate briefing in

actions at the Court of International Trade). This Court’s Rules require that all motions

“must . . . .state with particularity the grounds for seeking the order,” USCIT R. 7(b)(1)(B),

and that briefs in support of motions for judgment on the agency record “must include the

authorities relied on and the conclusions of law deemed warranted by the authorities,”

USCIT R. 56.1(c)(2) (agency record actions other than a 1581(c) action); USCIT R.

56.2(c)(2) (1581(c) action); see also MTZ Polyfilms, 33 CIT at 1579, 659 F. Supp. 2d at
Court No. 14-00007                                                                     Page 14


1309. Failing to enforce these requirements deprives the court “in substantial measure of

that assistance of counsel which the system assumes.” Carducci, 714 F.2d at 177.

       There is no real argument in Sanhua’s challenge to Commerce’s 15-day liquidation

policy. In fact, Sanhua’s briefing is similar to argumentation the court deemed waived in

JBF RAK LLC v. United States, 38 CIT ___, ___, 991 F. Supp. 2d 1343, 1356 (2014).

Compare Pl.’s Br. at 12-14 with Pl. JBF RAK LLC’s Mem. of Law in Supp. of its Mot. for

J. on the Agency R. Pursuant to R. 56.2 at 21-23, JBF RAK, 38 CIT ___, 991 F. Supp. 2d

1343 (No. 13-cv-00211), ECF No. 32. There, the court faulted the plaintiff for failing to

identify relevant authority and for failing to discuss and apply the appropriate analytical

framework. JBF RAK, 38 CIT at ___, 991 F. Supp. 2d at 1356. “[T]o review the issue in

this context,” the court noted, “it would have to first assume the role of co-plaintiff, reframe

[the plaintiff’s] arguments under [Chevron], wrestle with the existing decisions on this

issue, and analyze Commerce's 15–day policy under that framework. The court would

effectively be litigating the issue for [plaintiff], which is something it cannot do.” Id.

       “It is well established that arguments that are not appropriately developed in a

party’s briefing may be deemed waived.” United States v. Great Am. Ins. Co., 738 F.3d

1320, 1328 (Fed. Cir. 2013); see also Carducci, 714 F.2d at 177. Here, Sanhua fails to

identify the relevant authority and apply the Chevron framework in analyzing the many

competing policy issues implicated by this legal question. See Pl.’s Br. at 12-14. The court

therefore deems this issue waived.2



2
 The court notes that Plaintiff’s claim may also be subject to dismissal pursuant to Rule
41(b)(4) for failure to comply with the Court’s Rules.
Court No. 14-00007                                                          Page 15


                                   III. Conclusion

      For the foregoing reasons, Sanhua’s motion for judgment on the agency record is

denied. Judgment will be entered accordingly.



                                                       /s/ Leo M. Gordon
                                                     Judge Leo M. Gordon



Dated: April 24, 2015
       New York, New York
