                                         Slip Op. 15-31

                    UNITED STATES COURT OF INTERNATIONAL TRADE


ZHAOQING TIFO NEW FIBRE CO., LTD.,                  :

                           Plaintiff,               :

               v.                                   :

UNITED STATES,                                      :
                                                            Court No. 13-00044
                           Defendant,               :

               and                                  :

DAK AMERICAS LLC,                                   :

                           Defendant-Intervenor. :

[Granting Plaintiff’s Motion for Judgment on the Agency Record]

                                                                            Dated: April 9, 2015

        Gregory S. Menegaz, deKieffer & Horgan, PLLC, of Washington, D.C., argued for
Plaintiff. With him on the briefs were J. Kevin Horgan and John J. Kenkel.

        Ryan M. Majerus, Commercial Litigation Branch, Civil Division, U.S. Department of
Justice, of Washington D.C., argued for Defendant. With him on the briefs were Benjamin C.
Mizer, Assistant Attorney General, Civil Division, and Jeanne E. Davidson, Director, and Patricia
M. McCarthy, Assistant Director, Commercial Litigation Branch. Of counsel on the briefs was
Shana Hofstetter, Office of the Chief Counsel for Import Administration, U.S. Department of
Commerce, of Washington, D.C.

       David C. Smith, Kelley Drye & Warren LLP, of Washington D.C., argued for Defendant-
Intervenor. With him on the briefs were Paul C. Rosenthal and Benjamin Blase Caryl.


                                          OPINION
RIDGWAY, JUDGE:

       In this action, Plaintiff Zhaoqing Tifo New Fibre Co., Ltd. (“Zhaoqing Tifo”) – a Chinese

producer and exporter of polyester staple fiber – contests the final results of the U.S. Department
Court No. 13-00044                                                                        Page 2



of Commerce’s fourth administrative review of the antidumping duty order covering polyester

staple fiber from the People’s Republic of China. See Certain Polyester Staple Fiber From the

People’s Republic of China: Final Results of Antidumping Duty Administrative Review; 2010-

2011, 78 Fed. Reg. 2366 (Jan. 11, 2013) (“Final Results”); Issues and Decision Memorandum for

the Final Results of the 2010-2011 Administrative Review (Jan. 4, 2013) (Pub. Doc. No. 108)

(“Issues & Decision Memorandum”).1

       Pending before the Court is Plaintiff’s Motion for Judgment on the Agency Record, in

which Zhaoqing Tifo contends that the antidumping margin calculated by Commerce in the Final

Results “double counts” certain energy costs and is therefore too high. See generally Plaintiff’s

Rule 56.2 Memorandum Re Counts I-IV of the Complaint in Support of Judgment on the Agency

Record (“Pl.’s Brief”); Plaintiff’s Rule 56.2 Reply Brief (“Pl.’s Reply Brief”).

       The Government opposes Zhaoqing Tifo’s motion, arguing that the company failed to

exhaust its administrative remedies, and that, in any event, Commerce’s treatment of energy costs

in the Final Results is supported by substantial evidence and otherwise in accordance with law.

The Government thus maintains that Commerce’s determination should be sustained.             See

generally, e.g., Defendant’s Response to Plaintiff’s Rule 56.2 Motion for Judgment Upon the

Agency Record (“Def.’s Response Brief”). Notably, the Government does not directly address the



       1
        Because the administrative record in this action includes confidential (i.e., business
proprietary) information, there are two versions of the record – the public version and the
confidential version. Only documents from the public version of the record, which have all
confidential information redacted, are cited herein. Moreover, all cited documents were filed
through IA ACCESS, an electronic filing system that Commerce began using during the course of
the administrative review at issue, as a replacement for the agency’s older Central Records Unit
(CRU) system. All documents are cited as “Pub. Doc. No. ____.”
Court No. 13-00044                                                                            Page 3



merits of Zhaoqing Tifo’s claim that the treatment of energy costs in the Final Results led to double

counting. Id. Like the Government, the Defendant-Intervenor – DAK Americas LLC (the

“Domestic Producer”) – similarly contends that Zhaoqing Tifo’s motion is barred by the doctrine

of exhaustion, and, moreover, asserts that there is no double counting. See generally, e.g.,

Defendant-Intervenor’s Response Brief in Opposition to Plaintiff’s Motion for Judgment Upon the

Agency Record (“Def.-Int.’s Response Brief”).

       Jurisdiction lies under 28 U.S.C. § 1581(c) (2006).2 For the reasons set forth below,

Zhaoqing Tifo’s Motion for Judgment on the Agency Record must be granted and this matter

remanded to Commerce for further consideration.


                                         I. Background

       Dumping occurs when merchandise is imported into the United States and sold at a price

lower than its “normal value,” resulting in material injury (or the threat of material injury) to the

U.S. industry. See 19 U.S.C. §§ 1673, 1677(34), 1677b(a). The difference between the normal

value of the merchandise and the U.S. price is the “dumping margin.” See 19 U.S.C. § 1677(35).

When normal value is compared to the U.S. price and dumping is found, antidumping duties equal

to the dumping margin are imposed to offset the dumping. See 19 U.S.C. § 1673; see generally

Dorbest Ltd. v. United States, 604 F.3d 1363, 1367 (Fed. Cir. 2010).

       Normal value generally is calculated using either the price in the exporting market (i.e., the

price in the “home market” where the goods are produced) or the cost of production of the goods,


       2
        All citations to statutes herein are to the 2006 edition of the United States Code. The
pertinent statutory text remained the same at all times relevant herein.
Court No. 13-00044                                                                           Page 4



when the exporting country is a market economy country. See 19 U.S.C. § 1677b.3 However,

where – as here – the exporting country has a non-market economy, there is often concern that the

factors of production (inputs) that are consumed in producing the merchandise at issue are under

state control, and that home market sales therefore may not be reliable indicators of normal value.

See 19 U.S.C. § 1677(18)(A); see generally Dorbest, 604 F.3d at 1367.

       In cases such as this, where Commerce concludes that concerns about the sufficiency or

reliability of the available data do not permit the normal value of the merchandise to be determined

in the typical manner, Commerce identifies one or more market economy countries to serve as a

“surrogate” and then “determine[s] the normal value of the subject merchandise on the basis of the

value of the factors of production” in the relevant surrogate country or countries,4 including “an

amount for general expenses and profit plus the cost of containers, coverings, and other expenses.”

See 19 U.S.C. § 1677b(c)(1), (4). This surrogate value analysis is designed to determine a

producer’s costs of production as if the producer operated in a hypothetical market economy. See,

e.g., Downhole Pipe & Equipment, L.P. v. United States, 776 F.3d 1369, 1375 (Fed. Cir. 2015)

(explaining that “Commerce ‘attempt[s] to construct a hypothetical market value of [a] product’

in the nonmarket economy” at issue (quoting Nation Ford Chemical Co. v. United States, 166 F.3d

1373, 1375 (Fed. Cir. 1999))).


       3
         In addition, in certain market economy cases, Commerce may calculate normal value
using the price in a third country (i.e., a country other than the exporting country or the United
States). See 19 U.S.C. § 1677b(a)(1)(B)(ii); RHP Bearings Ltd. v. United States, 288 F.3d 1334,
1338 (Fed. Cir. 2002) (discussing 19 U.S.C. § 1677b(a)(1)(B)(ii), (C)).
       4
        Commerce typically values all factors of production using a single surrogate country. 19
C.F.R. § 351.408(c)(2) (2010); Dorbest, 604 F.3d at 1368.
Court No. 13-00044                                                                          Page 5



       Factors of production to be valued “include, but are not limited to – (A) hours of labor

required, (B) quantities of raw materials employed, (C) amounts of energy and other utilities

consumed, and (D) representative capital cost, including depreciation.”         See 19 U.S.C. §

1677b(c)(3); see generally Dorbest, 604 F.3d at 1367-68. However, valuing the factors of

production consumed in producing subject merchandise does not capture certain items such as (1)

manufacturing/factory overhead, (2) selling, general, and administrative expenses (“SG&A”), and

(3) profit. Commerce calculates those surrogate values using ratios – known as “surrogate

financial ratios” – that the agency derives from the financial statements of one or more companies

that produce identical (or at least comparable) merchandise in the relevant surrogate market

economy country. See 19 C.F.R. § 351.408(c)(4) (2010)5; 19 U.S.C. § 1677b(c)(1); Dorbest, 604

F.3d at 1368. The central issue in the pending motion is whether – as Zhaoqing Tifo alleges –

certain energy costs are embedded in the surrogate financial ratios that Commerce used in the Final

Results here that are also (in effect) captured elsewhere in the agency’s antidumping calculations,

resulting in the double counting of energy costs (and thus inflating Zhaoqing Tifo’s antidumping

margin).6


       5
        All references to regulations are to the 2010 edition of the Code of Federal Regulations.
The pertinent text of the regulations cited remained the same at all times relevant herein.
       6
         “An overriding purpose of Commerce’s administration of antidumping laws is to calculate
dumping margins as accurately as possible.” Yangzhou Bestpak Gifts & Crafts Co. v. United
States, 716 F.3d 1370, 1379 (Fed. Cir. 2013) (citing Rhone Poulenc, Inc. v. United States, 899
F.2d 1185, 1191 (Fed. Cir. 1990)); see also Ningbo Dafa Chemical Fiber Co. v. United States, 580
F.3d 1247, 1257 (Fed. Cir. 2009) (highlighting Commerce’s obligation to “establish[] antidumping
margins as accurately as possible” (quoting Shakeproof)); Shakeproof Assembly Components v.
United States, 268 F.3d 1376, 1382 (Fed. Cir. 2001) (summarizing Court’s “reason[ing] that the
purpose of the statutory provisions is to determine antidumping margins ‘as accurately as
possible’” (quoting Lasko)); Lasko Metal Products, Inc. v. United States, 43 F.3d 1442, 1446 (Fed.
Court No. 13-00044                                                                           Page 6



       The underlying antidumping order in this case, which dates back to 2007, covers polyester

staple fiber from the People’s Republic of China (“PRC”), a product generally used as stuffing in

sleeping bags, mattresses, ski jackets, comforters, cushions, pillows, and furniture. See Notice of

Antidumping Duty Order: Certain Polyester Staple Fiber from the People’s Republic of China, 72

Fed. Reg. 30,545, 30,546 (June 1, 2007). The case at bar involves the fourth administrative review

of that antidumping duty order.7 The period of review is June 1, 2010 through May 31, 2011.


Cir. 1994) (quoting Allied-Signal Aerospace Co. v. United States, 996 F.2d 1185, 1191 (Fed. Cir.
1993) for proposition that “statutory purpose ‘is to facilitate the determination of dumping margins
as accurately as possible . . .’”; quoting Rhone Poulenc, 899 F.2d at 1191 for proposition that the
antidumping statute “sets forth procedures in an effort to determine margins ‘as accurately as
possible’”).

        Accordingly, the caselaw holds that, as a general rule, double counting is not permitted in
antidumping margin calculations, because it is distortive, rendering margins less accurate. See,
e.g., DuPont Teijin Films China Ltd. v. United States, 38 CIT ____, ____, 7 F. Supp. 3d 1338,
1345-46 (2014) (ruling that “double counting should be avoided, as it does not provide a fair price
comparison”); Geum Poong Corp. v. United States, 26 CIT 322, 326-28, 193 F. Supp. 2d 1363,
1369-71 (2002) (remanding matter to agency for reconsideration of double counting, explaining
that “[c]ounting potentially anomalous profit rates twice . . . would give a misleading picture of
the profit experience of other . . . producers of goods in the same general category as the subject
merchandise”); Holmes Products Corp. v. United States, 16 CIT 628, 632, 795 F. Supp. 1205,
1207-08 (1992) (holding that “[d]ouble-counting is to be avoided”); see also Pl.’s Brief at 22 n.5
(collecting cases on double counting). Commerce’s administrative determinations are to the same
general effect. See, e.g., Issues and Decision Memorandum for the Final Determination in the
Antidumping Duty Investigation of Multilayered Wood Flooring from the People’s Republic of
China (Oct. 11, 2011) at 20 (Comment 2) (stating that “[i]t is [Commerce’s] longstanding practice
to avoid double-counting costs where the requisite data are available to do so” (emphasis omitted)
(citation omitted)).
       7
        Antidumping duty investigations (i.e., “original” investigations) determine in the first
instance “whether the elements necessary for the imposition of [an antidumping] duty . . . exist.”
19 U.S.C. § 1673a. The statute also provides for periodic (typically, annual) administrative
reviews of antidumping duty orders (at the request of an interested party), to update the applicable
antidumping duty rate. See 19 U.S.C. § 1675; Sioux Honey Ass’n v. Hartford Fire Ins. Co., 672
F.3d 1041, 1047 (Fed. Cir. 2012).
Court No. 13-00044                                                                             Page 7



       Zhaoqing Tifo itself requested this administrative review, because, the company explains,

“all the rates of the mandatory respondents earned in the first through the third administrative

review were de minimis and the 4.44% rate assigned to Zhaoqing Tifo as a ‘separate rate’ exporter

was a hindrance to [the company’s] sales” of polyester staple fiber. Pl.’s Brief at 2-3. “Indeed,”

Zhaoqing Tifo states, “the three largest producer/exporters of recycled [polyester staple fiber] have

been excluded from the [Antidumping Duty] Order.” Id. at 3. Like those three producers,

Zhaoqing Tifo recycles bottles made from polyester staple fiber (e.g., water and soda bottles) by

chipping, cleaning, drying, and extruding them into polyester staple fiber. Id.

       In all four prior segments of this proceeding – that is, in the original antidumping duty

investigation that led to the Antidumping Duty Order here and in the first three administrative

reviews of that Order, Commerce selected India as the surrogate country and relied on Indian

financial statements to calculate surrogate financial ratios.       Plaintiff’s Supplemental Brief

Regarding Exhaustion of Administrative Remedies at 3 (“Pl.’s Supp. Brief”). Because financial

statements in India are relatively detailed, Commerce was able to segregate (i.e., isolate) the energy

costs that were reflected in the financial statements and to exclude them from the surrogate

financial ratios calculated by the agency. Id. Commerce then separately valued Zhaoqing Tifo’s

energy costs – including electricity, water, and coal – in the factors of production database. Id.8

This methodology avoided any potential double counting.




       8
         Zhaoqing Tifo uses “simple steam coal” to heat water as part of its production process.
See Issues & Decision Memorandum at 3 (Comment 1). Consistent with the practice of the parties
in their briefs, the terms “coal” and “steam coal” are used interchangeably herein.
Court No. 13-00044                                                                          Page 8



       In this fourth administrative review, Commerce advised the parties that it “intend[ed] to

issue its surrogate country selection prior to or in” the agency’s Preliminary Results. See

Commerce’s Memorandum to All Interested Parties at 2 (Nov. 9, 2011) (Pub. Doc. No. 27)

(“Commerce’s Memorandum on Surrogate Country Selection”). India did not appear on the “non-

exhaustive list of six countries” that Commerce provided to the parties for consideration as

potential surrogates. Id. at 1.9 Commerce solicited the parties’ views as to the appropriate

surrogate country, establishing a firm deadline for the filing of such views. At the same time,

Commerce also set a second deadline (which was one month after the first deadline) for the parties’

submission of any “publicly available information to value factors of production for consideration

for purposes of [Commerce’s Preliminary Determination].” See id. at 2; Certain Polyester Staple

Fiber From the People’s Republic of China: Preliminary Results of the Antidumping Duty

Administrative Review, 77 Fed. Reg. 39,990, 39,991-92 (July 6, 2012) (“Preliminary Results”)

(summarizing Commerce’s Memorandum on Surrogate Country Selection).

       On the deadline specified by Commerce, Zhaoqing Tifo submitted its views concerning the

selection of an appropriate surrogate country, advocating for Thailand. Preliminary Results, 77

Fed. Reg. at 39,991.10 The deadline came and went, however, and the Domestic Producer filed


       9
        At the time, Commerce had begun to move away from the use of India as the surrogate
country, concerned that India and the PRC are not at sufficiently comparable levels of economic
development. See Defendant’s Response to Plaintiff’s Supplemental Brief at 2 (“Def.’s Supp.
Response Brief”); Issues & Decision Memorandum at 4, 7-8 (Comment 1); Commerce’s
Memorandum on Surrogate Country Selection at 1 (listing six countries, including Thailand and
Indonesia, determined to be at level of economic development comparable to PRC).
       10
          It is worth noting that the section of the Preliminary Results devoted to “Surrogate
Country” makes no reference to Zhaoqing Tifo’s December 9, 2011 submission – the sole timely
filing that Commerce received in response to the agency’s request for parties’ views concerning
Court No. 13-00044                                                                          Page 9



nothing. Id. On Commerce’s second deadline (one month thereafter), Zhaoqing Tifo submitted

extensive, detailed data concerning the valuation of factors of production, assuming the selection

of Thailand as the surrogate country (particularly in the absence of any suggestion of any other

country by the Domestic Producer). Id. That second deadline passed and, again, the Domestic

Producer filed nothing. Id.

       Not until 10 days after Commerce’s second deadline did the Domestic Producer file

comments setting forth (for the first time, in comments that the Domestic Producer styled as

“rebuttal”) its views that Commerce should select Indonesia as the surrogate country – a full 41

days past Commerce’s specified deadline for the parties’ submission of such views. See Domestic

Producer’s Submission of Surrogate Value Data for Preliminary Results (Cover Letter) at 3 (Jan.

19, 2012) (Pub. Doc. No. 43); Preliminary Results, 77 Fed. Reg. at 39,991-92 (referring to

Domestic Producer’s submission); Commerce’s Memorandum on Surrogate Country Selection at

2 (directing parties to file “comments, if any, on surrogate country selection . . . no later than

December 9, 2011”). With those views, the Domestic Producer also submitted surrogate value

data that assumed Commerce’s selection of Indonesia as the surrogate country – 10 days after the

deadline specified by Commerce for the submission of such data for consideration for inclusion in

the Preliminary Results. See Domestic Producer’s Submission of Surrogate Value Data for



the selection of an appropriate surrogate country. Instead, that section of the Preliminary Results
refers only to Zhaoqing Tifo’s January 9, 2012 submission of data concerning the valuation of
factors of production (submitted on the deadline specified by Commerce for the parties’ filing of
such information) and to the Domestic Producer’s data, which were filed 10 days after that
deadline. Compare Preliminary Results, 77 Fed. Reg. at 39,992 (section captioned “Surrogate
Country”), with id., 77 Fed. Reg. at 39,991 (section captioned “Surrogate Country and Surrogate
Value Data”).
Court No. 13-00044                                                                           Page 10



Preliminary Results (Parts 1-2) at Atts. 1-2 (Jan. 19, 2012) (Pub. Doc. Nos. 44-45); Preliminary

Results, 77 Fed. Reg. at 39,991-92 (referring to Domestic Producer’s submission); Commerce’s

Memorandum on Surrogate Country Selection at 2 (requiring all comments and surrogate value

data for consideration in the Preliminary Results to be filed “no later than January 9, 2012”).11

       In the Preliminary Results, Commerce – for the first time in any segment of this proceeding

– selected Indonesia as the surrogate country, as advocated by the Domestic Producer in the

comments that it filed with Commerce. Preliminary Results, 77 Fed. Reg. at 39,992-93.12 To

derive surrogate financial ratios, the Preliminary Results relied on the financial statements of P.T.

Asia Pacific, an Indonesian producer of polyester staple fiber. Id., 77 Fed. Reg. at 39,992, 39,995.

Commerce based that decision in part on its understanding at that time that P.T. Asia Pacific

“share[d] the same level of integration as Zhaoqing Tifo.” Id., 77 Fed. Reg. at 39,992.

       P.T. Asia Pacific’s financial statements are relatively detailed, and include separate line

items for that company’s energy inputs. Pl.’s Brief at 5; see also Petitioner’s Rebuttal Brief at 13-



       11
          In its submission on surrogate country selection and surrogate value data, the Domestic
Producer acknowledged that – due to the timing of the submission – Commerce was not obligated
to consider the proffered information in preparing the agency’s Preliminary Results. Domestic
Producer’s Submission of Surrogate Value Data for Preliminary Results (Cover Letter) at 3 n.7.
The Domestic Producer did not explain why it failed to file its views urging Commerce to select
Indonesia as the surrogate country on or before the firm deadline that the agency had established
for the submission of such views. Nor did the Domestic Producer explain why it had not submitted
its surrogate value data on or before the deadline that Commerce set for the submission of such
data to permit it to be considered for purposes of the Preliminary Results.
       12
         Zhaoqing Tifo has not contested Commerce’s selection of Indonesia as the surrogate
country for this review. However, in making its case on exhaustion of administrative remedies,
Zhaoqing Tifo has sought to spell out the practical and procedural repercussions of the Domestic
Producer’s untimely submission of its views on surrogate country selection. See n.25, infra.
Court No. 13-00044                                                                         Page 11



14 (Pub. Doc. No. 101) (“Domestic Producer’s Administrative Rebuttal Brief”). Commerce

therefore excluded all energy costs from the surrogate financial ratios for purposes of the

Preliminary Results, and valued all of Zhaoqing Tifo’s energy inputs – coal, electricity, and water

– in the factors of production database, with no concerns about double counting. Pl.’s Brief at 5.

The Preliminary Results addressed Commerce’s determinations concerning surrogate values not

only for coal, electricity, and water, but also for a wide range of other factors of production,

including such items as inland freight and brokerage and handling. See generally Preliminary

Results, 77 Fed. Reg. at 39,994-95.

       Following Commerce’s publication of the Preliminary Results,13 Zhaoqing Tifo filed an

administrative case brief with the agency. See Case Brief of Zhaoqing Tifo New Fibre Co., Ltd.

(Pub. Doc. No. 94) (“Zhaoqing Tifo’s Administrative Case Brief”); Final Results, 78 Fed. Reg. at

2366. In that brief, Zhaoqing Tifo explained that the operations of P.T. Asia Pacific were much

more highly integrated than those of Zhaoqing Tifo, and that it was therefore not appropriate for

Commerce to rely on P.T. Asia Pacific’s financial statements in calculating surrogate financial

ratios for this administrative review. Zhaoqing Tifo argued that Commerce instead should rely on

the financial statements of a different Indonesian producer of polyester staple fiber, P.T. Tifico

Fiber Indonesia Tbk (“P.T. Tifico”), which Zhaoqing Tifo had placed on the administrative record.


       13
         In the Preliminary Results, Commerce stated that Zhaoqing Tifo’s dumping margin was
0.21% (i.e., de minimis). Preliminary Results, 77 Fed. Reg. at 39,996. However, that figure was
in error. Following publication of the Preliminary Results, the Domestic Producer submitted
ministerial error comments, pointing out that Commerce had inadvertently calculated the per-unit
rate (when it should have calculated the ad valorem rate) and that the correct dumping margin was
15.09%. Commerce agreed, and reflected the correction when it issued the Final Results. See
Issues & Decision Memorandum at 16 (Comment 6); Def.’s Response Brief at 3 n.1.
Court No. 13-00044                                                                            Page 12



Zhaoqing Tifo explained that P.T. Tifico – like Zhaoqing Tifo – is not fully integrated. See

generally Zhaoqing Tifo’s Administrative Case Brief at 3, 15.

       Attached to its administrative case brief were Zhaoqing Tifo’s proposed calculations of

surrogate financial ratios derived from the financial statements of P.T. Tifico. See Zhaoqing Tifo’s

Administrative Case Brief at 20; id. at Exh. 3. In the presentation of the proposed surrogate

financial ratios, Zhaoqing Tifo left the “Energy” column blank, reflecting the fact that – unlike the

financial statements of P.T. Asia Pacific – P.T. Tifico’s financial statements do not include specific

line items for energy inputs. See Zhaoqing Tifo’s Administrative Case Brief at Exh. 3; see also

Pl.’s Supp. Brief at 11-12 (captioned “Zhaoqing Tifo Presented A Financial Calculation With No

Energy Factors, Implying That If The Department Included Them As [Factors of Production] They

Would Be Double Counted”); Plaintiff’s Supplemental Response Brief Regarding Exhaustion of

Administrative Remedies at 5, 8 (“Pl.’s Supp. Response Brief”) (similar).

       Besides contesting the financial statements used to derive the surrogate financial ratios,

Zhaoqing Tifo’s administrative case brief also challenged the surrogate values for coal and for

water that Commerce used in calculating the Preliminary Results. In particular, on the assumption

that Commerce would continue to rely on P.T. Asia Pacific’s financial statements in the Final

Results and thus would also continue to include coal in the factors of production database (as

Commerce did in the Preliminary Results), Zhaoqing Tifo argued that Commerce should abandon

the Indonesian import statistics that were used to value coal in the Preliminary Results and instead

should use domestic values – specifically, coal prices from the Indonesian Ministry of Energy and

Mineral Resources for the grade of coal that Zhaoqing Tifo uses in its operations. Zhaoqing Tifo’s

Administrative Case Brief at 2, 7-15. Zhaoqing Tifo further advocated that the water costs for a
Court No. 13-00044                                                                              Page 13



single municipality (which were used in the Preliminary Results) should be replaced with averaged

water rates including data for additional municipalities. Id. at 3, 23.14

        Although the Domestic Producer did not file an administrative case brief, it did file a

rebuttal brief responding to Zhaoqing Tifo’s brief.            See generally Domestic Producer’s

Administrative Rebuttal Brief; Final Results, 78 Fed. Reg. at 2366. The Domestic Producer argued

that, in calculating surrogate financial ratios, Commerce’s Final Results should continue to rely on

the financial statements of P.T. Asia Pacific that were used in the Preliminary Results. See

Domestic Producer’s Administrative Rebuttal Brief at 13-14.                 The Domestic Producer

characterized any differences between the levels of integration of Zhaoqing Tifo and P.T. Asia

Pacific as “trivial.” Id. at 13.

        More importantly for purposes of the pending motion, in the rebuttal brief that it filed with

Commerce, the Domestic Producer underscored the fact that the financial statements of P.T. Tifico

are much less “complete and detailed” than those of P.T. Asia Pacific – a concern that the Domestic

Producer characterized as “more critical” than any differences in the relative levels of integration

of the companies’ operations. Domestic Producer’s Administrative Rebuttal Brief at 13-14. In

particular, the Domestic Producer emphasized that P.T. Tifico’s financial statements “include[] no

separate breakout of [P.T. Tifico’s] energy costs.” Id. (emphasis in the original); see also id. at 1

(stating that P.T. Tifico “is a less suitable surrogate because its financial data are less detailed”).


        14
          In addition to the selection of financial statements used to derive surrogate financial
ratios, and the surrogate values for coal and water, Zhaoqing Tifo’s administrative case brief also
addressed Commerce’s “zeroing” practice and contested the Preliminary Results’ treatment of
inland freight costs, and brokerage and handling costs. See generally Zhaoqing Tifo’s
Administrative Case Brief at 3-4, 20-28. However, none of those issues has any bearing on the
pending motion.
Court No. 13-00044                                                                             Page 14



       Criticizing Zhaoqing Tifo for assertedly “ignor[ing] the lack of . . . electricity, water or any

other energy-specific data” in P.T. Tifico’s financial statements, the Domestic Producer

underscored that those financial statements “have a major element missing, namely the cost of

goods sold has no breakout for electricity, water or other energy factors.” Domestic Producer’s

Administrative Rebuttal Brief at 14 (emphases added). The Domestic Producer further expressly

cautioned Commerce that – if the agency were to decide to rely on P.T. Tifico’s financial

statements for purposes of the Final Results – the agency would be required to “place all potential

energy costs into the [manufacturing/factory] overhead numerator” in the surrogate financial ratios

and to “turn off all company-specific energy and water consumption factors” (i.e., to remove all

“energy and water consumption factors” from Zhaoqing Tifo’s factors of production database), “in

order to capture all costs while also preventing double-counting.” Id. (emphases added); see also

Issues & Decision Memorandum at 9 (restating, almost verbatim, Domestic Producer’s points

concerning the absence of any line items for “electricity, water, [and] other energy factors” in P.T.

Tifico’s financial statements and related need for Commerce to remove “all company-specific

energy and water consumption factors” from factors of production database, in order to “prevent[]

double-counting”).

       The Domestic Producer similarly addressed the other claims in Zhaoqing Tifo’s

administrative case brief. As to the valuation of coal, for example, the Domestic Producer argued

that Commerce’s Preliminary Results properly relied on import data, disputing Zhaoqing Tifo’s

attacks on the accuracy and reliability of those data and questioning the domestic price data that

Zhaoqing Tifo proffered. Domestic Producer’s Administrative Rebuttal Brief at 1-13. The
Court No. 13-00044                                                                          Page 15



Domestic Producer also opposed Zhaoqing Tifo’s assertions that the Final Results should use a

more broad-based set of data to value water. Id. at 17.

       In the Final Results, Commerce made a change from the Preliminary Results (which had

relied on the financial statements of P.T. Asia Pacific) and instead derived the surrogate financial

ratios using the financial statements of P.T. Tifico. Final Results, 78 Fed. Reg. at 2367; see

generally Issues & Decision Memorandum at 8-11 (Comment 2). Persuaded by Zhaoqing Tifo’s

administrative case brief, Commerce concluded that “P.T. Tifico’s less integrated and less complex

production operations are more comparable to Zhaoqing Tifo’s than those of P.T. Asia Pacific.”

Id. at 10. Commerce therefore determined that, for purposes of the Final Results, the financial

statements of P.T. Tifico “represent[] the best available information.” Id. at 11.15

       However, acknowledging the legitimacy of the Domestic Producer’s concerns about the

lack of detail in P.T. Tifico’s financial statements, Commerce’s Issues and Decision Memorandum

pointedly observed that “P.T. Tifico’s financial statement does not break out energy [costs].”

Issues & Decision Memorandum at 14 (Comment 4) (emphasis added); see also id. at 11 (stating

that “P.T. Tifico’s financial statement does not include a separate breakout of its costs for

electricity and water”). Accordingly, “in order to prevent double counting,” the Final Results

“placed all electricity and water costs into the [manufacturing/factory] overhead numerator” (i.e.,

included electricity and water in the surrogate financial ratios) and removed from the factors of

production database the “electricity and water consumption factors” that the agency had included



       15
        The Domestic Producer did not appeal Commerce’s selection of P.T. Tifico’s financial
statements as the basis for the surrogate financial ratios used in the Final Results in this review.
Court No. 13-00044                                                                            Page 16



in the database for purposes of the Preliminary Results. Id.; see also Final Results, 78 Fed. Reg.

at 2367 (stating that Commerce “did not separately value electricity and water in the final margin

program because these factors of production are already captured in the surrogate financial

ratios”).

        Commerce was silent as to any potential double counting of the “other energy factors”

(beyond water and electricity) to which the Domestic Producer’s rebuttal brief referred. Despite

the fact that P.T. Tifico’s financial statements do not include line items for electricity, water, or

any other sources of energy (such as the natural gas that P.T. Tifico uses),16 and even though the

Issues and Decision Memorandum made specific mention of the risk of double counting energy


        16
          Apparently P.T. Tifico – like P.T. Asia Pacific – uses natural gas, rather than coal, as
energy in its production of polyester staple fiber. See, e.g., Def.-Int.’s Response Brief at 22-23 &
nn.63 & 64 (referring to, respectively, documentation concerning P.T. Asia Pacific’s use of natural
gas and P.T. Tifico’s gas purchase and sale agreement); see also Commerce’s Preliminary
Surrogate Value Memorandum at Att. 18 (July 5, 2012) (Pub. Doc. No. 60) (documenting
consumption of electricity and gas by P.T. Asia Pacific; listing “Electricity and Gas” as
“Manufacturing Expense,” based on P.T. Asia Pacific’s financial statements); Domestic
Producer’s Submission of Surrogate Value Data for Preliminary Results (Part 1) at Att. 1 (Jan. 19,
2012) (Pub. Doc. No. 44) (documenting consumption of electricity and gas by P.T. Asia Pacific;
in Notes to Consolidated Financial Statements of P.T. Asia Pacific, at pp. 93-94, listing “Electricity
and gas” as “Manufacturing Expenses” and stating that “electricity and gas expenses were paid to
PT Wismakarya Prasetya”); Zhaoqing Tifo’s Submission of Surrogate Value Data for Final
Results (Part 8) at Exh. SV-14 (Aug. 8, 2012) (Pub. Doc. No. 75) (documenting consumption of
gas by P.T. Tifico; in Notes to Financial Statements of P.T. Tifico, at p. 45, under “Guarantee
Deposit,” referring to “gas sale and purchase agreement with PT Perusahaan Gas Negara
(Persero)”).

         Accordingly, although the parties’ briefs frequently refer to the “double counting of coal,”
it is thus more accurate to refer to the double counting of “energy inputs” (or “energy sources” or
“energy factors”). Zhaoqing Tifo’s concern is that, to the extent that natural gas (and any other
such energy inputs) are embedded in the surrogate financial ratios derived from P.T. Tifico’s
financial statements (and cannot be isolated and removed from those ratios), the inclusion of coal
in the factors of production database may effectively result in the double counting of energy inputs.
Court No. 13-00044                                                                         Page 17



inputs, Commerce continued to include coal in Zhaoqing Tifo’s factors of production database in

the Final Results, just as it had done in the Preliminary Results.        See Issues & Decision

Memorandum at 3-8 (Comment 1). Further, rejecting Zhaoqing Tifo’s arguments favoring the use

of Indonesian domestic data on coal prices, Commerce continued to rely on the same import

statistics that it used in the Preliminary Results. Id. at 5-8.

        Zhaoqing Tifo’s objections to the surrogate value used for water in the Preliminary Results

were mooted in the Final Results by Commerce’s determination not to separately value water in

the factors of production database. Commerce reasoned that, because P.T. Tifico’s financial

statements include no separate line item for water, water is “already captured in the surrogate

financial ratios.” See Final Results, 78 Fed. Reg. at 2367 (stating that Commerce “did not

separately value electricity and water in the final margin program because these factors of

production are already captured in the surrogate financial ratios”); Issues & Decision

Memorandum at 13-14 (Comment 4) (explaining that, “[b]ecause P.T. Tifico’s financial statement

does not break out energy, consistent with [Commerce’s] practice, [the Final Results] will not

separately value water in the margin program, as it is already captured in the surrogate financial

ratios” (footnote omitted)).17 The Final Results assigned Zhaoqing Tifo a dumping margin of

9.98%. See Final Results, 78 Fed. Reg. at 2367.


        17
          As noted above, Zhaoqing Tifo’s administrative case brief addressed Commerce’s
practice of zeroing, and challenged the Preliminary Results’ treatment of inland freight, and
brokerage and handling costs, as well as the selection of financial statements and the surrogate
values for coal and water used in the Preliminary Results. See n.14, supra. In the Final Results,
Commerce made no changes to the way in which the Preliminary Results had treated inland freight
costs, brokerage and handling costs, and zeroing. See Issues & Decision Memorandum at 11-13
(Comment 3) (inland freight costs); id. at 14-15 (Comment 5) (brokerage and handling costs); id.
at 16 (Comment 8) (zeroing).
Court No. 13-00044                                                                              Page 18



       Zhaoqing Tifo was puzzled by the fact that – given that P.T. Tifico’s financial statements

do not include specific line items for electricity, water, or any other energy inputs (such as natural

gas) – Commerce removed only electricity and water from Zhaoqing Tifo’s factors of production

database for purposes of the Final Results. In light of Commerce’s express recognition of the need

to avoid double counting, and absent any explanation for treating coal differently than electricity

and water, Zhaoqing Tifo assumed that Commerce’s inclusion of coal in the factors of production

database was an inadvertent error by the agency, and filed a Ministerial Error Correction Request

with Commerce to that effect. See Zhaoqing Tifo’s Ministerial Error Correction Request (Pub.

Doc. No. 112). But see Domestic Producer’s Rebuttal to Zhaoqing Tifo’s Jan. 22nd “Clerical

Error” Allegation (Pub. Doc. No. 113).

       In its response to Zhaoqing Tifo’s allegation of ministerial error, Commerce declined

Zhaoqing Tifo’s request to have coal removed from the factors of production database. See

generally Commerce’s Ministerial Error Allegation Memorandum (Pub. Doc. No. 116)

(“Commerce’s Ministerial Error Allegation Memorandum”). Specifically, Commerce stated that

the inclusion of coal in the factors of production database was “the result of a methodological

decision” by the agency, not a “ministerial error.” Id. at 5-6. In its entirety, Commerce’s two-

paragraph rationale reads:

       We disagree with Zhaoqing Tifo that [Commerce] made a ministerial error by
       including steam coal as a factor of production (“FOP”) in its normal value
       calculations for Zhaoqing Tifo in the Final Results. . . . [A] ministerial error is
       defined at 19 CFR § 351.224(f) as “an error in addition, subtraction, or other
       arithmetic function, clerical error resulting from inaccurate copying, duplication, or
       the like, and any [other] similar type of unintentional error which the Secretary
       considers ministerial.” Thus, any issue raised by interested parties as a ministerial
       error which is, in fact, the result of a methodological decision by [Commerce] will
Court No. 13-00044                                                                              Page 19



        not be considered a ministerial error as it would not meet [Commerce’s] regulatory
        definition of the term.

        As we noted in the Prelim[inary] Surrogate Value Memo, [Commerce] intended to
        include steam coal as an FOP in [the agency’s] calculation of normal value, and to
        value this FOP using Indonesia’s Harmonized Tariff Schedule category 2701.19.
        [Commerce] did not change this decision in the Final Results. Moreover, it is clear
        [Commerce] intended to include steam coal as an FOP in the Final Results as it is
        the first issue in the Issues and Decision Memo, where [the agency] articulated [its]
        intention to apply a surrogate value to the steam coal FOP. Thus, [Commerce] did
        not inadvertently fail to exclude steam coal as an FOP in the normal value
        calculations for the Final Results.

Id. (footnotes omitted).

        Commerce’s Ministerial Error Allegation Memorandum thus shed very little light on the

Final Results’ treatment of coal and other energy inputs such as natural gas (relative to water and

electricity).   In some respects, the Ministerial Error Allegation Memorandum raised more

questions than it answered. The Memorandum does not explain why it is significant that

Commerce’s Preliminary Surrogate Value Memorandum indicated that the agency intended to

value coal in the factors of production database. The Preliminary Surrogate Value Memorandum

pre-dates the Preliminary Results, which relied on the financial statements of P.T. Asia Pacific;

and those financial statements include line items for energy inputs. Thus, for purposes of the

Preliminary Results, no party objected to including all three of Zhaoqing Tifo’s energy inputs in

the factors of production database (and, to avoid double counting, excluding water, electricity, and

natural gas from the surrogate financial ratios). However, Commerce relied on a different set of

financial statements for the Final Results – specifically, the financial statements of P.T. Tifico,

which (unlike the financial statements of P.T. Asia Pacific) do not include line items for energy

sources.
Court No. 13-00044                                                                           Page 20



       Further, the Preliminary Surrogate Value Memorandum indicated not only Commerce’s

intent to value coal in the factors of production database, but also electricity and water as well

(which is, in fact, what Commerce did in the Preliminary Results). The Ministerial Error

Allegation Memorandum is silent as to why the change of financial statements and the need to

avoid double counting required Commerce to remove (exclude) electricity and water from the

factors of production database in the Final Results, but did not also require the removal (exclusion)

of coal.

       This action ensued.18


       18
         Although Zhaoqing Tifo’s Complaint includes a total of 10 specific counts, only the first
four counts are addressed in the pending motion. Those four counts relate to Commerce’s
inclusion of coal in the factors of production database for purposes of the Final Results, and
Zhaoqing Tifo’s attendant concerns about the potential double counting of energy inputs.

        In particular, Count I alleges that Commerce’s failure to remove coal from the factors of
production database means that Commerce “did not select the ‘best available information’ for the
surrogate value of coal,” and that the Final Results are therefore “unsupported by substantial
evidence.” See Complaint, Count I; see Pl.’s Brief at 8. Count II alleges that Commerce acted
“contrary to law” by including coal in the factors of production database at the same time the
agency excluded water and electricity. Complaint, Count II; see Pl.’s Brief at 8-9. Count III
alleges that it was “arbitrary and capricious” for Commerce to include coal, while excluding water
and electricity. Complaint, Count III; see Pl.’s Brief at 9. And Count IV alleges that Commerce’s
inclusion of coal in the factors of production database, while excluding water and electricity, “was
a ministerial error that should have been promptly corrected.” Complaint, Count IV. Zhaoqing
Tifo withdrew Count IV in its opening brief, explaining that “the remedy [sought by Count IV]
overlaps the remedy sought in Counts I through III, namely the removal of the coal energy factor
from [Zhaoqing Tifo’s] [factors of production] database.” Pl.’s Brief at 9. Accordingly, only
Counts I through III are presently before the court.

        Counts V, VI, VII, and VIII of the Complaint contest the surrogate values that Commerce
used in the Final Results to value various inputs – including, respectively, coal, inland freight,
water, and brokerage and handling. Complaint, Counts V-VIII. Count IX alleges that Commerce
erred in rejecting a letter of credit adjustment to brokerage and handling, while Count X asserts
that Commerce’s “failure to issue a deficiency questionnaire regarding the sources and meaning
of the domestic Indonesian coal surrogate value was contrary to law.” Id., Counts IX-X. Count
Court No. 13-00044                                                                          Page 21



                                     II. Standard of Review

       In an action reviewing an antidumping determination by Commerce, the agency’s

determination must be upheld except to the extent that it is found to be “unsupported by substantial

evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i);

see also NMB Singapore Ltd. v. United States, 557 F.3d 1316, 1319 (Fed. Cir. 2009). Substantial

evidence is “more than a mere scintilla”; rather, it is “such relevant evidence as a reasonable mind

might accept as adequate to support a conclusion.” Universal Camera Corp. v. NLRB, 340 U.S.

474, 477 (1951) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)); see also Mittal

Steel Point Lisas Ltd. v. United States, 548 F.3d 1375, 1380 (Fed. Cir. 2008) (same).

       Moreover, any determination as to the substantiality of the evidence “must take into

account whatever in the record fairly detracts from its weight,” including “contradictory evidence

or evidence from which conflicting inferences could be drawn.” Suramerica de Aleaciones

Laminadas, C.A. v. United States, 44 F.3d 978, 985 (Fed. Cir. 1994) (quoting Universal Camera

Corp., 340 U.S. at 487-88); see also Mittal Steel, 548 F.3d at 1380-81 (same). That said, the mere

fact that it may be possible to draw two inconsistent conclusions from the record does not prevent

Commerce’s determination from being supported by substantial evidence. American Silicon

Techs. v. United States, 261 F.3d 1371, 1376 (Fed. Cir. 2001); see also Consolo v. Federal

Maritime Comm’n, 383 U.S. 607, 620 (1966).

       In evaluating whether a determination by Commerce was “arbitrary and capricious,” the

court considers “whether the decision was based on a consideration of the relevant factors and


XI is an all-purpose “catch-all” claim, stating that “[u]pon information and belief, [Commerce]
erred in other aspects of its final results” which are not specified. Id., Count XI.
Court No. 13-00044                                                                              Page 22



whether there has been a clear error of judgment.” Citizens to Preserve Overton Park, Inc. v.

Volpe, 401 U.S. 402, 416 (1971). “The agency must articulate a ‘rational connection between the

facts found and the choice made.’” Bowman Transportation, Inc. v. Arkansas-Best Freight

System, Inc., 419 U.S. 281, 285 (1974) (quoting Burlington Truck Lines, Inc. v. United States,

371 U.S. 156, 168 (1962)). A determination is arbitrary and capricious if the agency “relied on

factors which Congress has not intended it to consider, entirely failed to consider an important

aspect of the problem, offered an explanation for its decision that runs counter to the evidence . . . ,

or is so implausible that it [cannot] be ascribed to a difference in view or the product of agency

expertise.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)

(“State Farm”). Similarly, “[a]gency action is arbitrary and capricious if ‘the agency offers

insufficient reasons for treating similar situations differently.’” West Deptford Energy, LLC v.

FERC, 766 F.3d 10, 21 (D.C. Cir. 2014) (quoting Muwekma Ohlone Tribe v. Salazar, 708 F.3d

209, 216 (D.C. Cir. 2013)).

       Lastly, while Commerce must explain the bases for its decisions, “its explanations do not

have to be perfect.”      NMB Singapore, 557 F.3d at 1319-20.            Nevertheless, “the path of

Commerce’s decision must be reasonably discernable” to support judicial review. Id. (citing State

Farm, 463 U.S. at 43); see generally 19 U.S.C. § 1677f(i)(3)(A) (requiring Commerce to “include

in a final determination . . . an explanation of the basis for its determination”).
Court No. 13-00044                                                                          Page 23



                                          III. Analysis

       The motion at hand is directed to Zhaoqing Tifo’s claim that Commerce “double counted”

certain energy costs in calculating Zhaoqing Tifo’s antidumping margin in the Final Results of the

fourth administrative review at issue here. Specifically, Zhaoqing Tifo contends that Commerce’s

use of surrogate financial ratios derived from the financial statements of P.T. Tifico (which do not

break out energy costs), in tandem with Commerce’s inclusion of coal in the factors of production

database, resulted in the double counting of energy costs in the Final Results. According to

Zhaoqing Tifo, it was improper for Commerce to include coal in the factors of production database

because the energy consumed by P.T. Tifico in its production of polyester staple fiber is embedded

in manufacturing/factory overhead in P.T. Tifico’s financial statements, and thus is included in the

surrogate financial ratios that Commerce used in the Final Results.

       As a threshold matter, the Government and the Domestic Producer contend that the

doctrine of exhaustion of administrative remedies bars Zhaoqing Tifo from prosecuting that claim.

As discussed below, however, the exhaustion argument is unavailing, in light of the specific

circumstances of this case. Moreover, the Final Results’ treatment of energy sources other than

electricity and water (including Zhaoqing Tifo’s coal and P.T. Tifico’s natural gas) is not

explained, precluding both any assessment of the substantiality of the evidence supporting

Commerce’s inclusion of coal in the factors of production database and any determination as to

whether Commerce’s action was arbitrary and capricious, as Zhaoqing Tifo contends.
Court No. 13-00044                                                                             Page 24



                     A. The Doctrine of Exhaustion of Administrative Remedies

       Invoking the doctrine of exhaustion of administrative remedies in an effort to bar

consideration of the merits of Zhaoqing Tifo’s “double counting” claim, the Government and the

Domestic Producer point to the statute, which provides that “the Court of International Trade shall,

where appropriate, require the exhaustion of administrative remedies.” 28 U.S.C. § 2637(d);

Def.’s Response Brief at 7-8; Def.-Int.’s Response Brief at 7.19 The Government and the Domestic

Producer similarly note the Court of Appeals’ observation that this Court “generally takes a ‘strict

view’ of the requirement that parties exhaust their administrative remedies.” Corus Staal BV v.

United States, 502 F.3d 1370, 1379 (Fed. Cir. 2007); see also Def.’s Response Brief at 8;

Defendant-Intervenor’s Supplemental Brief in Response to the December 30, 2013 Court Order at

7 (“Def.-Int.’s Supp. Brief”). In addition, the Government and the Domestic Producer cite 19

C.F.R. § 351.309(c)(2), Commerce’s regulation requiring that a party’s administrative case brief

(filed with the agency following issuance of preliminary results) “present all arguments that

continue in the submitter’s view to be relevant to the . . . final results.” 19 C.F.R. § 351.309(c)(2);

see also Def.’s Response Brief at 9, 12; Def.-Int.’s Supp. Brief at 7.




       19
          To the extent that the Government intimates that 28 U.S.C. § 2637(d) is a “mandatory”
exhaustion provision, the Court of Appeals has squarely held to the contrary. Compare
Defendant’s Supplemental Brief at 6 (“Def.’s Supp. Brief”), with Corus Staal BV v. United States,
502 F.3d 1370, 1379, 1381 (Fed. Cir. 2007) (discussing 28 U.S.C. § 2637(d), noting (inter alia)
that the language “is not absolute,” and citing McCarthy v. Madigan, 503 U.S. 140, 144 (1992),
for proposition that “where Congress has not clearly required exhaustion, sound judicial discretion
governs”); see also n.33, supra (collecting cases which stand for proposition that, in international
trade cases, application of doctrine of exhaustion is committed to Court of International Trade’s
sound discretion).
Court No. 13-00044                                                                             Page 25



       Against this backdrop, the Government asserts that Zhaoqing Tifo’s administrative case

brief “did not challenge Commerce’s inclusion of steam coal in the factors of production

[database]” and that Zhaoqing Tifo therefore failed to exhaust its administrative remedies and is

prohibited from raising its double counting claim in this forum. Def.’s Response Brief at 7; see

also, e.g., id. at 2, 5-6, 7-14. The Domestic Producer makes the same argument. See, e.g., Def.-

Int.’s Response Brief at 1-2, 8-13.

       As explained below, however, the doctrine of exhaustion has no application here, where –

at the time of the filing of administrative case briefs and rebuttal briefs with Commerce – Zhaoqing

Tifo had no objection (and no reason to object) to Commerce’s inclusion of coal in the factors of

production database. Moreover, even if the doctrine of exhaustion did apply, the administrative

rebuttal brief filed by the Domestic Producer alerted Commerce to the potential for double

counting of energy inputs if the agency were to switch to the financial statements of P.T. Tifico

for purposes of the Final Results. Commerce thus had sufficient opportunity to address the double

counting of energy in the Final Results. In fact, the Final Results did address double counting with

respect to electricity and water, albeit not as to coal or natural gas or any other source of energy.20


       20
          The analysis in section III.A proceeds on the assumption that Zhaoqing Tifo’s
administrative case brief did not alert Commerce to Zhaoqing Tifo’s position that the concurrent
use of P.T. Tifico’s financial statements and the inclusion of coal in the factors of production
database would result in the double counting of energy inputs. However, Zhaoqing Tifo points to
the surrogate financial ratio calculations that it submitted as part of its administrative case brief
(and, in particular, to the blank column for “Energy”) as a reflection of its position that coal should
not be valued in the factors of production database if Commerce relied on P.T. Tifico’s financial
statements in the Final Results, due to the risk of double counting. See Zhaoqing Tifo’s
Administrative Case Brief at Exh. 3; see also Pl.’s Supp. Brief at 11-12 (captioned “Zhaoqing Tifo
Presented A Financial Calculation With No Energy Factors, Implying That If The Department
Included Them As [Factors of Production] They Would Be Double Counted”); Pl.’s Supp.
Response Brief at 5, 8 (similar).
Court No. 13-00044                                                                             Page 26




                       1. The Inapplicability of the Doctrine of Exhaustion

       The Government and the Domestic Producer seek to make much of the fact that Commerce

included coal in the factors of production database at the Preliminary Results stage. Thus, they




        Zhaoqing Tifo thus contends that, in fact, it did exhaust its administrative remedies by
raising the double counting issue in its administrative case brief. But see Def.’s Supp. Response
Brief at 4-5; Defendant-Intervenor’s Supplemental Response Brief at 4-6, 14 (“Def.-Int.’s Supp.
Response Brief”). Because the analysis here concludes that Zhaoqing Tifo is entitled to pursue its
double counting claim in this forum even if Zhaoqing Tifo did not raise that claim at the
administrative level, there is no need to consider whether Zhaoqing Tifo’s administrative case brief
would have sufficed to preserve its rights.

        Zhaoqing Tifo also suggests that its filing of a ministerial error allegation with Commerce
following issuance of the Final Results served to exhaust its administrative remedies. See Pl.’s
Reply Brief at 7; Pl.’s Supp. Brief at 2, 15, 16-17, 25, 27; [Plaintiff’s] Supplemental Authority
Regarding Exhaustion of Administrative Remedies at 5 (“Pl.’s Brief on Supp. Authority”);
[Plaintiff’s] Response to Notice of Supplemental Authority Regarding Exhaustion of
Administrative Remedies at 2, 4. According to the Domestic Producer, “where a party properly
challenges a ministerial error following the final results of an administrative review, that party will
be deemed to have exhausted its administrative remedies with regards to that error.” Def.-Int.’s
Response Brief at 8 (citing 19 U.S.C. § 1673d(e)); see also Fischer S.A. Comercio, Industria &
Agricultura v. United States, 36 CIT ____, ____, 885 F. Supp. 2d 1366, 1375 (2012). However,
the Domestic Producer argues that, in this case, Zhaoqing Tifo’s ministerial error allegation “was
in fact a substantive challenge to Commerce’s Final Results, dressed up as a ministerial error
because [Zhaoqing Tifo] had not properly and timely raised that issue before Commerce.” Def.-
Int.’s Response Brief at 11-13. The Domestic Producer contends that the ministerial error
allegation therefore did not exhaust Zhaoqing Tifo’s administrative remedies. Id. (citing Fischer,
36 CIT at ____, 885 F. Supp. 2d at 1376 (stating that court would not permit plaintiffs there “to
make an end run around the exhaustion requirement by entertaining an unexhausted substantive
issue disguised as a ministerial error”)); see also Def.-Int.’s Response Brief at 9 & n.31; Def.-Int.’s
Supp. Response Brief at 6-7, 11. The Government makes much the same argument. See Def.’s
Supp. Response Brief at 3-4, 5-6, 7. Both because this issue was not sufficiently briefed and
because the analysis here concludes that Zhaoqing Tifo is entitled to pursue its double counting
claim in this forum even if Zhaoqing Tifo did not raise that claim at the administrative level, there
is no need to reach the issue of whether the ministerial error allegation exhausted Zhaoqing Tifo’s
remedies.
Court No. 13-00044                                                                              Page 27



contend, Zhaoqing Tifo was obligated to include in its administrative case brief an objection to

that treatment of coal, and the absence of such an objection constitutes a failure to exhaust

administrative remedies. According to the Government and the Domestic Producer, it was too late

for Zhaoqing Tifo to object to the inclusion of coal in the factors of production database and to

raise its concerns about double counting energy inputs after the Final Results issued. See, e.g.,

Def.’s Response Brief at 5-6, 7, 9-13; Def.-Int.’s Response Brief at 1-2, 9-11.21


       21
           The Government and the Domestic Producer go so far as to assert – time and time again,
throughout the course of briefing – that, in its administrative case brief, Zhaoqing Tifo
“affirmatively argued . . . that Commerce should apply a surrogate value to steam coal and value
it as a factor of production,” and that Zhaoqing Tifo therefore should not now be heard to complain
that Commerce included coal in the factors of production database in the Final Results. Def.’s
Response Brief at 9-10; see also, e.g., id. at 21; Def.-Int.’s Response Brief at 3, 9-10, 20, 22, 24
n.69; Def.’s Supp. Brief at 3, 8, 10, 11, 13-14; Def.-Int.’s Supp. Brief at 2, 3, 7, 11, 15, 16, 19, 22,
23-24, 24; Def.’s Supp. Response Brief at 4, 4-5, 6, 7; Def.-Int.’s Supp. Response Brief at 2, 3, 6,
9, 10-11, 12, 14; Defendant-Intervenor’s Memorandum on Supplemental Authority in Response
to Court Order Dated March 2, 2015 at 3, 5, 9, 10 (“Def.-Int.’s Brief on Supp. Authority”);
Defendant’s Response to Notices of Supplemental Authority at 2-3 (“Def.’s Response Brief on
Supp. Authority”).

         The Government claims, for example, that “Zhaoqing Tifo’s [administrative] case brief
squarely addressed the issue of whether steam coal should be treated as part of overhead or as a
factor of production” and that Zhaoqing Tifo “argued extensively that coal must be treated as a
factor of production.” Def.’s Supp. Brief at 10-11. In like vein, the Domestic Producer claims
that Zhaoqing Tifo “affirmatively argued that Commerce should value coal as a direct material,”
Def.-Int.’s Response Brief at 10 (emphasis omitted), and “specifically argued for including the
coal factor in the [factors of production] database.” Def.-Int.’s Supp. Response Brief at 10; Def.-
Int.’s Brief on Supp. Authority at 3 (emphasis omitted; otherwise, verbatim).

         This is a wholesale mischaracterization of Zhaoqing Tifo’s position and goes perilously
beyond the bounds of permissible zealous advocacy. On the assumption that Commerce would
continue to rely on P.T. Asia Pacific’s financial statements in the Final Results (as it did in the
Preliminary Results) and thus would continue to include coal in the factors of production database
(as it did in the Preliminary Results), Zhaoqing Tifo argued in its administrative case brief that –
in the Final Results – Commerce should use domestic Indonesian data from Indonesia’s Ministry
of Energy and Mineral Resources to value coal, rather than the Indonesian import statistics that
Commerce used in the Preliminary Results. See Zhaoqing Tifo’s Administrative Case Brief at 7-
Court No. 13-00044                                                                           Page 28



       What the Government and the Domestic Producer fail to appreciate, however, is the

significance of Commerce’s decision to change the financial statements on which it relied for

calculating surrogate financial ratios between the Preliminary Results (where Commerce used the

financial statements of P.T. Asia Pacific) and the Final Results (where the agency instead relied

on the statements of P.T. Tifico). Because the financial statements of P.T. Asia Pacific include

individual line items for energy inputs, the Preliminary Results isolated and specifically excluded

those inputs from the surrogate financial ratios and instead included coal, water, and electricity in

the factors of production database. As such, Zhaoqing Tifo had no objections to the inclusion of

coal (or water, or electricity) in the factors of production database, and no concerns about the

double counting of energy inputs, at the Preliminary Results stage.22


15. As a separate argument, Zhaoqing Tifo’s administrative case brief also urged Commerce to
abandon the financial statements of P.T. Asia Pacific in favor of those of P.T. Tifico, because the
operations of P.T. Tifico more closely resemble those of Zhaoqing Tifo. See Zhaoqing Tifo’s
Administrative Case Brief at 15-20. And, to paraphrase Zhaoqing Tifo, “[a]scertaining the correct
surrogate valu[e] of coal” (which is the subject of Count V of the Complaint and is not the subject
of the pending motion) is a separate issue from whether (in the abstract) coal should be valued in
the factors of production database, which is, in turn, “a separate issue from whether it is double
counting to value coal at all” if energy costs are already embedded in surrogate financial ratios, as
Zhaoqing Tifo here contends. See Pl.’s Supp. Brief at 8.
       22
          The folly in this argument of the Government and the Domestic Producer is readily
exposed by reframing Zhaoqing Tifo’s objection. Contrary to the assertions of the Government
and the Domestic Producer, Zhaoqing Tifo’s claim is not an objection to the inclusion of coal in
the factors of production database per se. Instead, Zhaoqing Tifo’s claim is an objection to the
double counting of energy inputs – and, implicitly, an objection to the inclusion of coal in the
factors of production database if it results in double counting.

        Zhaoqing Tifo’s point is that the inclusion of coal in the factors of production database
carried with it no risk of double counting until the Final Results, where Commerce derived the
surrogate financial ratios from the financial statements of P.T. Tifico, which – as Commerce
candidly concedes – “do[] not break out energy [costs].” Issues & Decision Memorandum at 14.
Court No. 13-00044                                                                              Page 29



        Under these circumstances, Zhaoqing Tifo was not required to exhaust its administrative

remedies, because – simply stated – at the time of the Preliminary Results, there was nothing to

exhaust. See generally, e.g., Corus Staal, 502 F.3d at 1381 (observing that doctrine of exhaustion

does not apply in situations where “the agency change[s] its position . . . after [a] party’s case brief

[has] been filed”); Qingdao Taifa Group Co. v. United States, 33 CIT 1090, 1092-93, 637 F. Supp.

2d 1231, 1236-37 (2009) (stating that “[a] party . . . may seek judicial review of an issue that it did

not raise in a case brief if Commerce did not address the issue until its final decision, because in

such a circumstance, the party would not have had a full and fair opportunity to raise the issue at

the administrative level” (citation omitted)), aff’d, 467 F. App’x 887 (Fed. Cir. 2012) (non-

precedential); Jacobi Carbons AB v. United States, 38 CIT ____, ____, 992 F. Supp. 2d 1360,

1366-67 (2014) (same).23


        23
          See also, e.g., Essar Steel, Ltd. v. United States, 753 F.3d 1368, 1374 (Fed. Cir. 2014)
(recognizing that doctrine of exhaustion does not apply in circumstances “where the party ‘had no
opportunity’ to raise the issue before the agency” (citation omitted)); Yangzhou Bestpak Gifts &
Crafts, 716 F.3d at 1381 (same); Consol. Bearings Co. v. United States, 348 F.3d 997, 1003-04
(Fed. Cir. 2003) (rejecting application of doctrine of exhaustion, concluding that there simply was
“[no] administrative procedure to exhaust”); CEMEX, S.A. v. United States, 133 F.3d 897, 904-
05 (Fed. Cir. 1998) (affirming trial court’s decision to remand issue to Commerce for correction
of particular error even though error had not been previously raised before agency; rejecting
argument that remand was barred by doctrine of exhaustion, because error at issue “was
undiscoverable until after Commerce published its final results”); Papierfabrik August Koehler
AG v. United States, 38 CIT ____, ____ n.14, 971 F. Supp. 2d 1246, 1256 n.14 (2014) (rejecting
argument that plaintiff’s claim was barred by doctrine of exhaustion, where plaintiff’s case brief
filed with the agency “could not have opposed [Commerce’s] construction of the regulations”
because that construction “did not appear until [Commerce] issued the Final Results”); Albemarle
Corp. v. United States, 37 CIT ____, ____, 931 F. Supp. 2d 1280, 1286-89 (2013) (as to two
separate claims, rejecting argument that litigation was barred by doctrine of exhaustion;
emphasizing that, as to first claim, “[Commerce’s] change in position . . . was announced in the
Final Results, after the submission of case briefs,” and, as to second claim, “[t]he ground on which
[plaintiff] brings [its] challenge . . . did not become apparent until issuance of the Final Results,
when Commerce announced that it had changed its surrogate value for [a certain input] based on
Court No. 13-00044                                                                             Page 30




the argument made by [another party]”); Zhengzhou Huachao Industrial Co. v. United States, 37
CIT ____, ____, 2013 WL 3215181 *7 (2013) (dismissing Government argument that doctrine of
exhaustion barred plaintiff’s claim, where agency position at issue “changed between the
Preliminary Determination and the Final Determination,” such that “plaintiff had no real
opportunity” to object at administrative level); Shantou Red Garden Foodstuff Co. v. United
States, 36 CIT ____, ____, 815 F. Supp. 2d 1311, 1333-34 (2012) (concluding that doctrine of
exhaustion did not apply, explaining that “[plaintiff] was not required to raise [the issue in
question] before [Commerce] to exhaust administrative remedies because [Commerce’s]
determination of [the relevant] surrogate values changed between the Preliminary Determination
and the Final Determination”); Globe Metallurgical Inc. v. United States, 35 CIT ____, ____, 781
F. Supp. 2d 1340, 1357 (2011) (declining to apply doctrine of exhaustion, where “the issue [in
question] . . . first manifested itself in the Final Results,” and “it was only after Commerce issued
the Final Results that [plaintiffs] had the opportunity to review the specific methodology
Commerce applied” in the Final Results); Jiaxing Brother Fastener Co. v. United States, 34 CIT
____, ____, 751 F. Supp. 2d 1345, 1355-56 (2010) (recognizing line of authority holding that “the
Court of International Trade will decide an unexhausted issue on the merits when the party raising
the issue had no opportunity to do so before the agency”); Dongbu Steel Co. v. United States, 34
CIT ____, ____, 677 F. Supp. 2d 1353, 1360-62 (2010) (concluding that plaintiffs’ “zeroing” claim
was not barred by doctrine of exhaustion “because [plaintiffs’] objections were not yet ripe at the
time case briefs were due in the administrative review”; “[Plaintiffs] were not required to exhaust
their remedies before the agency, because there was nothing to exhaust”), vacated on other
grounds, 635 F.3d 1363 (Fed. Cir. 2011); Zhengzhou Harmoni Spice Co. v. United States, 33 CIT
453, 495 n.49, 617 F. Supp. 2d 1281, 1318 n.49 (2009) (explaining that “the Chinese Producers
had no reason to raise [their] claim . . . until after Commerce made its argument in the Final Results,
when Commerce, in effect, ‘opened the door’ on the issue . . . . Under such circumstances, the
Chinese Producers were not required to exhaust their remedies before the agency, because there
was nothing to exhaust”); Valley Fresh Seafood, 31 CIT at 1990-91, 1994-96 (rejecting claim of
failure to exhaust where “Commerce did not apply [a certain regulation] in the Preliminary Results
and, at that time, gave no indication that it was considering doing so in the Final Results,” such
that “the Final Results constituted the first public statement by Commerce” of the agency’s
position); China Steel Corp. v. United States, 28 CIT 38, 59-60, 306 F. Supp. 2d 1291, 1310-11
(2004) (holding that exhaustion doctrine did not preclude consideration of merits of plaintiff’s
claim where challenged Commerce position “was first pronounced in the agency’s Final
Determination,” such that “[p]laintiff did not have the opportunity to presents its objections . . . at
the administrative level”); Pohang Iron & Steel Co. v. United States, 23 CIT 778, 792-93 (1999)
(holding doctrine of exhaustion inapplicable, in light of the “lack of fair opportunity to raise the
issue before the agency,” where Preliminary Results indicated that U.S. sales would be treated one
way, then Final Results treated such sales differently); LTV Steel Co. v. United States, 21 CIT
838, 867-69 & n.26, 985 F. Supp. 95, 119-20 & n.26 (1997) (finding that exhaustion doctrine did
not preclude judicial review of party’s claim where party “did not have the opportunity to challenge
Commerce’s methodology until Commerce articulated that methodology and applied it” in the
Final Results); Saha Thai Steel Pipe Co. v. United States, 17 CIT 727, 729-30, 828 F. Supp. 57,
Court No. 13-00044                                                                             Page 31



       Zhaoqing Tifo’s claim for potential double counting did not arise until the Final Results,

when Commerce both relied on the financial statements of P.T. Tifico and included coal in the




59-60 (1993) (holding that a party was not required to file a case brief or rebuttal brief to exhaust
its administrative remedies where it had “received all the remedy it sought from the preliminary
determination, i.e., it received a very low company-specific duty assessment,” but Commerce
assigned a higher country-wide rate in the final determination); SKF USA, Inc. v. U.S. Dep’t of
Commerce, 15 CIT 152, 159 n.6, 762 F. Supp. 344, 350 n.6 (1991) (finding exhaustion doctrine
inapplicable where party lacked opportunity to contest issue involving Commerce’s use of third
country data to determine foreign market value of merchandise, because agency did not reveal
results of recalculations of home market viability until final determinations), aff’d, 972 F.2d 1355
(Fed. Cir. 1992) (non-precedential); Al Tech Specialty Steel Corp. v. United States, 11 CIT 372,
377, 661 F. Supp. 1206, 1210 (1987) (stating that “in determining whether questions are precluded
from consideration on appeal [because they were not first raised before the agency], the Court will
assess the practical ability of a party to have its arguments considered by the administrative body”);
American Permac, Inc. v. United States, 10 CIT 535, 536 n.2, 642 F. Supp. 1187, 1188 n.2 (1986)
(noting that application of doctrine of exhaustion would be “inappropriate” because issue did not
arise until long after comment period for preliminary results, and because Commerce could issue
its final decision at any time; as such, it was unclear whether plaintiffs had a “definite” opportunity
to raise their objections before Commerce); Philipp Bros. v. United States, 10 CIT 76, 83-84, 630
F. Supp. 1317, 1324 (1986) (ruling that, because Commerce did not address issue in question until
agency’s final decision, plaintiff had no opportunity to raise the issue at the administrative level
and doctrine of exhaustion therefore did not preclude judicial review).

        The Government and the Domestic Producer seek to distinguish a handful of the cases cited
here. See generally, e.g., Def.-Int.’s Supp. Brief at 10-12 & nn.31-33, 16 & n.50 (discussing, and
seeking to distinguish, cases cited for proposition that requirement of exhaustion does not apply
where, as a practical matter, party had no meaningful opportunity to raise issue at agency level);
Def.’s Supp. Response Brief at 8-9 (same); Def.-Int.’s Supp. Response Brief at 9, 10-11 & n.37
(same); Def.-Int.’s Brief on Supp. Authority at 5-6, 10 (same); Def.’s Response Brief on Supp.
Authority at 2-3 (same); Defendant-Intervenor’s Response to Plaintiff’s March 6, 2015
Supplemental Authority at 2-3 (“Def.-Int.’s Response Brief on Supp. Authority”) (same). But the
efforts of the Government and the Domestic Producer are in vain. It is true that the facts of each
case are different and that none of the cases relied on precisely parallels this case. However, the
Government and the Domestic Producer cannot meaningfully distinguish each and every case on
point. Nor can they dismiss the broader current of thought that runs through the cited decisions or
the compelling considerations of policy, pragmatism, and fundamental fairness that inform them.
Court No. 13-00044                                                                             Page 32



factors of production database.24 Although the financial statements of P.T. Tifico do not include

separate line items for energy inputs (unlike the statements of P.T. Asia Pacific), the Final Results

left coal in the factors of production database, and excluded only electricity and water.25

       The Government and the Domestic Producer argue that Zhaoqing Tifo’s administrative

case brief should have anticipated the determinations that Commerce reached in the Final Results.

See, e.g., Defendant’s Supplemental Brief at 3-4, 8-10 (“Def.’s Supp. Brief”); Def.-Int.’s Supp.

Brief at 1-2, 9, 15-19; Defendant-Intervenor’s Memorandum on Supplemental Authority in

Response to Court Order Dated March 2, 2015 at 3-4, 9-10 (“Def.-Int.’s Brief on Supp.

Authority”). But the law does not mandate that litigants be prescient.26


       24
          In the course of briefing, the Domestic Producer (in effect) candidly concedes that
Zhaoqing Tifo’s claim did not arise until the Final Results, with Commerce’s switch to the
financial statements of P.T. Tifico: “The double-counting issue ar[ose] only due to the lack of
specificity of [P.T. Tifico’s] financial statements; indeed, [Zhaoqing Tifo] never alleged double-
counting in the Preliminary Results specifically because the P.T. Asia [Pacific] financial
statements were . . . more detailed[] than those for P.T. Tifico.” Def.-Int.’s Supp. Brief at 19.
       25
         Zhaoqing Tifo makes out a case that its failure to raise its double counting claim in its
administrative case brief is largely attributable to the actions (or, more accurately, the inaction) of
the Domestic Producer in failing to submit its views on surrogate country selection in accordance
with the deadline set by Commerce. Specifically, Zhaoqing Tifo posits that if – on or before that
deadline – the Domestic Producer had submitted its views on surrogate country selection
(advocating for the selection of Indonesia), then Zhaoqing Tifo would have submitted the financial
statements of P.T. Tifico before the Preliminary Results. Presumably, Commerce would have
chosen P.T. Tifico’s financial statements for the Preliminary Results (as it did in the Final Results).
And, if Commerce also included coal in the factors of production database for the Preliminary
Results (as it presumably would have done), then the double counting issue would have been
presented in the Preliminary Results, and Zhaoqing Tifo would have raised the issue in its
administrative case brief. See, e.g., Pl.’s Supp. Brief at 4.
       26
         With the benefit of 20/20 hindsight, it now may seem abundantly clear to the Government
and the Domestic Producer that Zhaoqing Tifo could have anticipated that, in the Final Results,
Commerce would decide to rely on the financial statement of P.T. Tifico, and that Commerce also
would exclude water and electricity – but not coal – from the factors of production database.
Court No. 13-00044                                                                            Page 33



       Zhaoqing Tifo was not required to anticipate that Commerce (1) would adopt P.T. Tifico’s

financial statements in lieu of those of P.T. Asia Pacific for purposes of the Final Results, and (2)

would recognize that P.T. Tifico’s financial statements do not include discrete line items for water,

electricity, and other energy inputs, and (3) would therefore exclude water and electricity from the

factors of production database, but (4) would leave coal in the database, with no explanation for

that treatment (particularly in light of any potential for double counting). Because Commerce gave

no indication prior to the Final Results that it would use financial ratios derived from financial

statements that lacked line items for energy inputs but would nevertheless leave coal in the factors

of production database, Zhaoqing Tifo’s “first meaningful opportunity to challenge Commerce’s

decision [to include coal in the factors of production database for purposes of the Final Results] .

. . is in this judicial review proceeding.” See Valley Fresh Seafood, Inc. v. United States, 31 CIT

1989, 1994 (2007); see generally id., 31 CIT at 1991, 1994-96 (same); see also Jacobi Carbons,

38 CIT at ____, 992 F. Supp. 2d at 1367 (under similar circumstances, noting that “while plaintiffs



However, the judgment of the Government and the Domestic Producer on this point is distorted
(at least to some extent) by the well-documented cognitive phenomenon known as “hindsight
bias.”

        “Hindsight bias” refers to the “tendency for people to overestimate the predictability of
past events.” C. Guthrie, J. Rachlinski, & A. Wistrich, Inside the Judicial Mind, 86 Cornell Law
Rev. 777, 799 (2001); see generally id., 86 Cornell Law Rev. at 778, 780 & n.13, 784, 799-805,
816-18 & nn.198-201, 820 & nn.209, 212, 821 & n.213, 824-25, 827, 828 & nn.233-36, 829
(explaining, inter alia, that, although “[f]ew judgments in ordinary life require people to assess the
predictability of past outcomes,” “such judgments are pervasive in the law”; citing numerous
examples of operation of hindsight bias in the law; and discussing empirical evidence on effect of
hindsight bias in the law and in the legal system); see also, e.g., C. Guthrie, J. Rachlinski, & A.
Wistrich, Judging by Heuristic: Cognitive Illusions in Judicial Decision Making, 86 Judicature 44,
47-48 (July/August 2002) (abstracted from Inside the Judicial Mind). Many other authorities
similarly address hindsight bias, in a legal context and otherwise.
Court No. 13-00044                                                                            Page 34



argued for the use of [certain] data [in their administrative briefs filed with Commerce], they could

hardly foresee [at that time] what use [Commerce] would make of that data,” and reasoning that

“[i]t is simply too much to ask of the parties to anticipate” the position that Commerce would take

and the rationale that the agency would give in the Final Results, and holding that, “because

plaintiffs had no realistic opportunity to present their arguments before [Commerce], . . . plaintiffs

did not fail to exhaust their administrative remedies”).27



       27
          See also Dongbu Steel, 34 CIT at ____, 677 F. Supp. 2d at 1360-62 (emphasizing that
“the law does not require a party to be prescient, and to be able to precisely predict the timing and
the exact contours” of final agency action, and explaining that “[a]lthough [plaintiffs] might have
been well-advised to raise their concerns in their case briefs filed with the agency (concerns which,
by definition, would have been somewhat hypothetical), they were under no legal obligation to do
so”); Qingdao Taifa, 33 CIT at 1092-93, 637 F. Supp. 2d at 1236-37 (concluding that doctrine of
exhaustion did not apply, because a party “[was] not required to predict that Commerce would
accept other parties’ arguments and change its decision” in Final Results); Pohang Iron & Steel,
23 CIT at 792-93 (reasoning that, as a matter of sound policy, parties should not be required to
raise anticipatory arguments in their administrative case briefs; “It would be foolish to encourage
parties to make arguments because they might somehow become important under a possible future
scenario. In the interest of administrative efficiency, parties should be encouraged to address only
the issues that are currently relevant”); Saha Thai, 17 CIT at 729-30, 828 F. Supp. at 59-60
(soundly rejecting Government argument that exhaustion doctrine should be applied to require
parties to anticipate issues and to “motivate all interested parties to an administrative review to
brief and litigate every possible issue,” pointing out that such an approach would lead to “wasteful
litigation”); cf. CEMEX, 133 F.3d at 904-05 (affirming trial court’s decision to remand issue to
Commerce for correction of error even though error had not been previously raised before agency;
explaining that “the remand . . . was not improper merely because [a party] did not exhaust its
administrative remedies,” where error at issue “was undiscoverable until after Commerce
published its final results”).

        Like the court in Pohang Iron & Steel as well as Saha Thai (discussed above), other courts
too have highlighted the compelling policy considerations that weigh against unduly demanding
application of the doctrine of exhaustion – that is, policy considerations that counsel against
requiring parties to try to foresee the future and to anticipate in their comments filed with the
agency the range of options and potential courses of action that the agency ultimately might take.
Thus, for example, as the U.S. Court of Appeals for the D.C. Circuit observed:
Court No. 13-00044                                                                              Page 35



       In sum, the doctrine of exhaustion of administrative remedies has no application here.




       While we certainly require some degree of foresight on the part of commenters, we
       do not require telepathy. We should be especially reluctant to require advocates for
       affected industries and groups to anticipate every contingency. To hold otherwise
       would encourage strategic vagueness on the part of agencies and overly defensive,
       excessive commentary on the part of interested parties seeking to preserve all
       possible options for appeal. Neither response well serves the administrative
       process.

Portland Cement Ass’n v. EPA, 665 F.3d 177, 186 (D.C. Cir. 2011); cf. Portland General Electric
Co. v. Bonneville Power Administration, 501 F.3d 1009, 1024 n.13 (9th Cir. 2007) (underscoring
wisdom of excusing failure to exhaust where issue that a plaintiff seeks to litigate was raised by
another party at the administrative level; “If we required each [party] . . . to raise every issue or be
barred from seeking judicial review of the agency’s action, we would be sanctioning the
unnecessary multiplication of comments and proceedings before the administrative agency. That
would serve neither the agency nor the parties.”); American Forest & Paper Ass’n v. EPA, 137
F.3d 291, 295 (5th Cir. 1998) (in context of challenge to agency rulemaking, rejecting agency
argument that, because plaintiff “did not participate in the agency proceedings below,” it was
“preclude[d] . . . from raising its objection in [the] court”; “The rule urged by EPA [i.e., that the
court should preclude a plaintiff from litigating an issue that it did not raise at the administrative
level] would require everyone who wishes to protect himself from arbitrary agency action . . . to
become . . . a psychic able to predict the possible changes that could be made” by the agency in
the course of the administrative proceeding).

        The Government and the Domestic Producer attempt to distinguish a number of the cases
cited above. See generally, e.g., Def.-Int.’s Supp. Brief at 16 & n.49 (discussing, and seeking to
distinguish, cases cited for proposition that it would be unrealistic and impractical, and/or unsound
as a matter of administrative law and policy, to interpret doctrine of exhaustion as requiring parties
to predict, or foresee, or anticipate possible ultimate agency action); Def.’s Supp. Response Brief
at 8-9 (same); Def.-Int.’s Brief on Supp. Authority at 10 (same). Again, however, the efforts of
the Government and the Domestic Producer meet with no success. To be sure, as explained in
note 23 above, the facts of each case are different, and none of the cases relied on is “on all fours”
with this case. However, it is also true that the Government and the Domestic Producer cannot
distinguish each and every case that is cited in a way that is meaningful. Moreover, they fail to
grapple with the undercurrent of thought that is reflected in the cited decisions and the
considerations of policy, pragmatism, and fundamental fairness that inform them.
Court No. 13-00044                                                                              Page 36



                2. Assuming Arguendo That the Doctrine of Exhaustion Applied

       Even if the doctrine of exhaustion of administrative remedies were applicable, two separate

but related exceptions to that doctrine also would apply. Thus, even if the doctrine of exhaustion

were applicable, Zhaoqing Tifo nevertheless still would be entitled to its day in court on its claim

that Commerce’s inclusion of coal in the factors of production database, coupled with the agency’s

use of P.T. Tifico’s financial statements (which do not separately break out energy costs), resulted

in the double counting of energy inputs in the Final Results.

         One well-recognized exception to the doctrine of exhaustion permits a party to litigate an

issue that the party did not exhaust at the administrative level where that issue was raised before

the agency by a different party. See, e.g., Indiana Utility Regulatory Comm’n v. FERC, 668 F.3d

735, 739 (D.C. Cir. 2012) (acknowledging exception to doctrine of exhaustion “when an agency

has considered the argument at the urging of another party”); Kessler v. Surface Transportation

Board, 635 F.3d 1, 8 (D.C. Cir. 2011) (recognizing exception to exhaustion doctrine allowing a

plaintiff to “raise [in litigation] any issue raised by any party to the administrative proceeding”);

Portland General Electric Co. v. Bonneville Power Administration, 501 F.3d 1009, 1023-25 (9th

Cir. 2007) (explaining that failure to exhaust is excused where issue that plaintiff seeks to raise in

litigation “was raised by someone other than the [plaintiff]” at the administrative level); American

Forest & Paper Ass’n v. EPA, 137 F.3d 291, 295-96 (5th Cir. 1998) (explaining that, even though

plaintiff “did not participate in the agency proceedings below” (and thus, by definition, did not

raise before the agency the issues that plaintiff sought to litigate in court), “the concerns underlying

the exhaustion doctrine [were] not implicated” where the issues that plaintiff sought to raise in
Court No. 13-00044                                                                              Page 37



litigation were raised by opposing parties at the administrative level; pointing out that “it is ironic

that [plaintiff] now seeks to preserve its claim on the basis of its opponents’ complaints”).28


       28
         To some extent, like the plaintiff in American Forest & Paper Ass’n, Zhaoqing Tifo too
now finds itself in the unusual and rather “ironic” position of “seek[ing] to preserve its [double
counting] claim on the basis of its opponent[’s] complaints” – i.e., on the basis of the Domestic
Producer’s cautions to Commerce about the potential for double counting and the resulting need
to remove “all [Zhaoqing Tifo]-specific energy and water . . . factors” from the factors of
production database if the agency decided to rely on P.T. Tifico’s financial statements for purposes
of determining the surrogate financial ratios for the Final Results. See American Forest & Paper
Ass’n v. EPA, 137 F.3d at 295-96; Domestic Producer’s Administrative Rebuttal Brief at 13-14.

         See also, e.g., Cellnet Communication, Inc. v. FCC, 965 F.2d 1106, 1109 (D.C. Cir. 1992)
(holding plaintiffs’ failure to exhaust to be excused where issue sought to be litigated was raised
by other parties at the administrative level); Natural Resources Defense Council, Inc. v. EPA, 824
F.2d 1146, 1150-52 (D.C. Cir. 1987) (“NRDC v. EPA”) (en banc) (quoting Buckeye, and, in action
challenging EPA’s withdrawal of proposed amendments to regulations, holding that plaintiff was
excused from exhaustion – notwithstanding plaintiff’s “total abstention from participation in the
rulemaking proceedings” – where the issue raised by plaintiff in litigation was “explicitly raised .
. . before the EPA in [another party’s] comments on the proposed amendments”); Washington
Ass’n for Television & Children v. FCC, 712 F.2d 677, 680-84 & n.10 (D.C. Cir. 1983) (citing
Buckeye and recognizing exception to exhaustion requirement where issue that plaintiff seeks to
litigate was raised before the agency by a different party); Office of Communication of the United
Church of Christ v. FCC, 465 F.2d 519, 523-24 (D.C. Cir. 1972) (permitting plaintiff to litigate
issue that it did not raise at administrative level, explaining that purpose of requiring exhaustion is
to allow agency an opportunity to consider issues before being subject to litigation and that “[t]here
is no requirement that this opportunity [for the agency to consider issues] be afforded in any
particular manner, or by any particular party”); Buckeye Cablevision, Inc. v. United States, 438
F.2d 948, 951-52 (6th Cir. 1971) (holding plaintiff entitled to litigate issues that it did not raise at
administrative level where “the identical issues . . . were raised by other parties” before the
agency); Shantou Red Garden, 36 CIT at ____, 815 F. Supp. 2d at 1332 (holding that, although
plaintiff failed to exhaust its administrative remedies, “[e]xcusing the failure . . . is appropriate
here because Commerce considered [plaintiff’s] objection . . . when it addressed the argument
advanced by [a different party]”); Trust Chem Co. v. United States, 35 CIT ____, ____ n.27, 791
F. Supp. 2d 1257, 1268 n.27 (2011) (excusing failure to exhaust where “Commerce was
[previously] put on notice of the issue” that plaintiff sought to raise in litigation and “the specific
information upon which [p]laintiff relie[d], . . . submitted by the [opposing party], [was]
necessarily before the agency”); Pakfood Public Co. v. United States, 34 CIT ____, ____, 724 F.
Supp. 2d 1327, 1351 (2010) (acknowledging that exhaustion is excused where agency had
opportunity to consider issue at administrative level “as a result of other parties’ arguments”),
aff’d, 453 F. App’x 986 (Fed. Cir. 2011) (non-precedential); Valley Fresh Seafood, 31 CIT at
Court No. 13-00044                                                                               Page 38



        It is therefore of relatively little moment whether or not, at the administrative level,

Zhaoqing Tifo raised concerns about the potential double counting of energy inputs, because –

without regard to whatever Zhaoqing Tifo said or didn’t say – the Domestic Producer clearly

sounded the alarm. Among other things, the administrative rebuttal brief that the Domestic

Producer filed with Commerce specifically and explicitly warned Commerce in no uncertain terms


1990-91, 1994-95, 1998 (citing, inter alia, NRDC v. EPA, and excusing failure to exhaust where
issue plaintiff sought to litigate was raised by another party at the administrative level, noting that
“[plaintiff’s] participation [at the administrative level] was not necessary to Commerce’s
deliberation on that issue” because “the petitioners raised [the] issue in their case brief”); Jinan
Yipin Corp. v. United States, 31 CIT 1901, 1938-40, 526 F. Supp. 2d 1347, 1379-81 (2007) (citing,
inter alia, NRDC v. EPA, and excusing failure to exhaust where issue that one plaintiff respondent
sought to litigate had been raised at administrative level by another plaintiff respondent; “[Plaintiff
respondent #1’s] . . . arguments were before Commerce as a part of [plaintiff respondent #2’s] case
brief”); LTV Steel, 21 CIT at 867-69 & n.26, 985 F. Supp. at 119-20 & n.26 (excusing failure to
exhaust where, inter alia, issue that party sought to litigate had been raised by a different party at
the administrative level, “albeit on more limited and general grounds”); Holmes Products Corp. v.
United States, 16 CIT 1101, 1103-04 (1992) (stating that “exhaustion may be excused if the issue
[in litigation] was raised by another party” before the agency); Timken Co. v. United States, 16
CIT 429, 437-38, 795 F. Supp. 438, 445 (1992) (excusing plaintiff’s failure to exhaust,
emphasizing that “[w]hile it may be true that [plaintiff] did not raise this issue below, it is certain
that [a different party] did,” and that “[t]he fact that it was another party that raised [the issue in
question] below does not prevent [plaintiff] from challenging it here”); SKF, 15 CIT at 159 n.6,
762 F. Supp. at 350 n.6 (excusing plaintiff’s failure to exhaust where “other parties brought the
issue to Commerce’s attention during the investigations”).

        The Government concedes that a party’s failure to exhaust is excused if the issue to be
litigated was raised before the agency by a different party. See Def.’s Supp. Brief at 15. However,
the Domestic Producer disputes the point and seeks to distinguish several of the cases cited to
support that proposition. See generally, e.g., Def.-Int.’s Supp. Response Brief at 8 n.25, 9-10
(discussing, and seeking to distinguish, cases cited for proposition that a party is entitled to litigate
an issue notwithstanding the party’s failure to exhaust at the administrative level where the issue
was raised before the agency by a different party). As explained above, although it is true that the
facts of each case are different and that none of the cases relied on precisely parallels this case, the
Domestic Producer cannot possibly distinguish every case cited. Nor it is possible to ignore the
broader themes that run through the cited decisions and the important considerations of policy,
pragmatism, and fundamental fairness that motivate them. See generally nn.23 & 27, supra.
Court No. 13-00044                                                                             Page 39



that, if the agency were to rely on P.T. Tifico’s financial statements in the Final Results, the agency

could avoid double counting only by “plac[ing] all potential energy costs into the

[manufacturing/factory] overhead numerator” in the surrogate financial ratios and “turn[ing] off

all [Zhaoqing Tifo]-specific energy and water consumption factors” by removing them from the

factors of production database.      Domestic Producer’s Administrative Rebuttal Brief at 14

(emphases added).29 In short, even if the doctrine of exhaustion were applicable here (which it is


       29
          Throughout supplemental briefing, the Domestic Producer repeatedly insists that its
administrative rebuttal brief did not raise the issue of the potential for double counting of coal.
See, e.g., Def.-Int.’s Supp. Brief at 2 (arguing that “no party raised the issue of double-counting
coal in its administrative case or rebuttal briefs”); id. at 8 (asserting that “[t]he issue of double-
counting the coal value was never raised before Commerce until after the Final Results were
issued”); id. at 9 (stating that “[n]o party to the case ever argued that coal would be double-
counted”); id. at 21-22 (asserting that Domestic Producer “raised in its administrative rebuttal brief
before Commerce the issue of double-counting water and electricity if Commerce chose to use the
new surrogate financial statement,” and that “no party raised the issue of double-counting the coal
factor in their briefs before Commerce”); id. at 23 (arguing that “[t]he double-counting issue as to
coal as a factor of production was never addressed before Commerce” until after the Final
Results); Def.-Int.’s Supp. Response Brief at 2 (asserting that “no party raised the double-counting
of coal issue in administrative case or rebuttal briefs”); id. at 4 (stating that no party raised “the
double-counting of coal issue” in its administrative brief filed with Commerce); id. at 8 (arguing
that “[n]owhere in its rebuttal brief did [the Domestic Producer] raise the double-counting of coal
issue”); id. (asserting that “[i]n its rebuttal brief arguments regarding energy factors, [the Domestic
Producer] repeatedly refers to ‘water and electricity,’ not coal”); id. at 9 (stating that “double-
counting of coal was never briefed before [Commerce]”); id. at 10 (asserting that “no party briefed
the issue of double-counting coal”); id. at 11 (arguing that “[t]he double-counting of coal issue
was not raised until . . . after the Final Results”); Def.-Int.’s Brief on Supp. Authority at 11
(asserting that no party raised “the double-counting coal issue” until after Final Results).

        True enough, the Domestic Producer’s administrative rebuttal brief did not refer
specifically to coal. See generally Domestic Producer’s Administrative Rebuttal Brief at 13-14.
But that is not the whole story, and it is a far cry from the Domestic Producer’s implication that its
brief addressed the potential double counting of only electricity and water and nothing else. See,
e.g., Def.-Int.’s Supp. Brief at 21-22 (asserting that Domestic Producer “raised in its administrative
rebuttal brief . . . the issue of double-counting water and electricity”); Def.-Int.’s Supp. Response
Brief at 8 (arguing that Domestic Producer’s administrative rebuttal brief “repeatedly refers to
‘water and electricity,’ not coal”). To the contrary, as discussed above, the Domestic Producer’s
Court No. 13-00044                                                                             Page 40




administrative rebuttal brief speaks to the potential for double counting not only electricity and
water, but also, more generally, “other energy factors” as well. See Domestic Producer’s
Administrative Rebuttal Brief at 13-14 (referring broadly to P.T. Tifico’s “energy costs”); id. at
14 (referring generally to P.T. Tifico’s “electricity, water [and] other energy factors”); id. (arguing
that, if Commerce uses P.T. Tifico’s financial statements in Final Results, agency must account
for “all potential energy costs” – not some energy costs, and certainly not only electricity and water
– in surrogate financial ratios); id. (arguing that, if Commerce uses P.T. Tifico’s financial
statements in Final Results, agency must “turn off all company-specific energy and water
consumption factors” – not merely electricity and “water consumption factors,” but all energy and
water consumption factors – in the factors of production database); id. (referring to “the lack of
electricity, water or any other energy-specific data” in P.T. Tifico’s financial statements).

         The Domestic Producer’s administrative rebuttal brief thus referred specifically to water
and electricity – but, contrary to the Domestic Producer’s representations in this forum, it did not
stop there. The brief expressly discussed “other energy factors” as well. See Domestic Producer’s
Administrative Rebuttal Brief at 13-14. It is telling that the Domestic Producer has ignored the
brief’s broader references to energy sources in general. Further, the Domestic Producer has offered
no explanation as to what was meant by phrases such as “other energy factors” and no explanation
as to why those references do not include energy inputs such as coal and natural gas. Whatever
the Domestic Producer meant to say in its administrative rebuttal brief, it cannot truthfully claim
that it intended to limit its argument concerning the potential for double counting to water and
electricity alone. It requires no imagination to read the Domestic Producer’s reference to “other
energy factors” (and other similar phrases) to cover energy inputs such as coal and natural gas;
and nothing on the record indicates that the Domestic Producer intended otherwise.

         Even more troubling are the Domestic Producer’s outright misrepresentations of fact. At
one point, for example, the Domestic Producer states – in a brief filed in this forum – that its
administrative rebuttal brief “argued that if Commerce used the P.T. Tifico financial statement . .
. , then Commerce would need to ‘turn off’ electricity and water consumption factors to prevent
double-counting.” See Def.-Int.’s Supp. Brief at 3-4. However, that is not an accurate statement
of what the Domestic Producer actually said in the referenced brief. Contrary to the Domestic
Producer’s claim, the statement in its administrative rebuttal brief was not limited to “electricity
and water consumption factors” (as the Domestic Producer now contends). (Emphasis added.)
Instead, the statement in the Domestic Producer’s brief referred much more broadly to “energy
and water consumption factors.” (Emphasis added.) See Domestic Producer’s Administrative
Rebuttal Brief at 14 (stating that Commerce would need to “turn off all company-specific energy
and water consumption factors . . . [to] prevent[] double-counting”) (emphasis added). Again, this
exceeds the limits of zealous advocacy. See n.21, supra.
Court No. 13-00044                                                                              Page 41



not),30 any failure to exhaust on the part of Zhaoqing Tifo would be excused, because the Domestic

Producer raised the double counting issue before Commerce.

       In addition, there is a second, related exception that would similarly serve to excuse any

failure to exhaust by Zhaoqing Tifo (again, assuming arguendo that the doctrine of exhaustion

otherwise applied). Specifically, the exhaustion requirement does not bar a plaintiff from raising

an issue in litigation if the agency in fact had an opportunity to consider the issue at the

administrative level, whether or not the agency actually availed itself of that opportunity. See,

e.g., Indiana Utility Regulatory Comm’n v. FERC, 668 F.3d at 739 (acknowledging exception to

doctrine of exhaustion “when an agency has considered the argument”); Ningbo Dafa Chemical

Fiber Co. v. United States, 580 F.3d 1247, 1259 (Fed. Cir. 2009) (sustaining Court of International

Trade’s ruling that plaintiff’s litigation of issue was not barred by doctrine of exhaustion where

Commerce had opportunity to consider plaintiff’s “alternative methodology” in course of agency

proceeding), aff’g, 32 CIT 926, 933, 577 F. Supp. 2d 1304, 1311 (2008) (stating court’s

disagreement with Government’s “stance” that “Commerce lacked the opportunity to consider”

issue raised by plaintiff in litigation); Portland General Electric, 501 F.3d at 1023-25 (explaining

that failure to exhaust is excused where “[the] agency . . . had an opportunity to consider the issue[,]

. . . . even if the issue was considered sua sponte by the agency”).31


       30
          See section III.A, supra (explaining that doctrine of exhaustion is not applicable under
facts of this case).
       31
          See also, e.g., American Forest & Paper Ass’n v. EPA, 137 F.3d at 295-96 (recognizing
that failure to exhaust is excused where agency had opportunity to consider the issue that plaintiff
seeks to litigate, and ruling that, “because the public comments . . . were sufficiently specific to
prompt EPA to adopt the provision contested [in the case at bar], the agency cannot reasonably
claim that it has been denied the opportunity to consider the issue”); NRDC v. EPA, 824 F.2d at
Court No. 13-00044                                                                              Page 42




1150-52 (quoting Office of Communication of the United Church of Christ v. FCC, and, in action
challenging EPA’s withdrawal of proposed amendments to regulations, holding that plaintiff was
excused from exhaustion – notwithstanding plaintiff’s “total abstention from participation in the
rulemaking proceedings” – where issue raised by plaintiff in litigation in fact “was raised before
the agency,” such that the agency “had notice of [the] issue and could, or should have, taken it into
account in reaching a final decision on the proposed amendments”; ultimately finding it “clear that
the EPA actually did consider” issue that plaintiff sought to raise in litigation); Cellnet
Communication, 965 F.2d at 1109 (holding plaintiffs’ failure to exhaust to be excused where issue
sought to be litigated was raised by other parties before the agency; “[c]onsideration of [an] issue
by the agency at the behest of another party is enough to preserve it”); Washington Ass’n for
Television & Children, 712 F.2d at 680-84 & n.10 (recognizing exception to exhaustion
requirement where the agency “in fact considered the issue”); Office of Communication of the
United Church of Christ, 465 F.2d at 523-24 (permitting plaintiff to litigate issue not exhausted at
administrative level, where issue in fact was “raised by the majority and challenged by the
dissenters” in agency’s final determination); Buckeye, 438 F.2d at 951-52 (holding plaintiff
entitled to litigate issues that it did not raise at administrative level where agency nevertheless “had
an opportunity to consider the identical issues”); Shantou Red Garden, 36 CIT at ____, 815 F.
Supp. 2d at 1332 (holding that, although plaintiff failed to exhaust its administrative remedies,
“[e]xcusing the failure . . . is appropriate here because Commerce considered [plaintiff’s] objection
. . . when it addressed the argument advanced by [a different party]”); Trust Chem, 35 CIT at ____
n.27, 791 F. Supp. 2d at 1268 n.27 (excusing failure to exhaust, emphasizing that “[t]he
determinative question is whether Commerce was put on notice of the issue,” and concluding that,
in case at bar, “Commerce was aware that [p]laintiff was contesting” the issue that plaintiff
subsequently raised in litigation and that “the specific information upon which [p]laintiff relie[d]
. . . [was] before the agency”); Pakfood, 34 CIT at ____, ____, 724 F. Supp. 2d at 1351, 1352-53
(acknowledging that exhaustion is excused where “the agency in fact thoroughly considered the
issue in question,” but ruling that, under specific circumstances of the case, Commerce did not
have “full and adequate opportunity to consider the [issue] in the first instance”); Valley Fresh
Seafood, 31 CIT at 1990-91, 1994-95, 1998 (citing general principle that “[t]he court may excuse
a party’s failure to raise an argument before the administrative agency if . . . the agency in fact
considered the issue,” and excusing failure to exhaust where “the issue on which [plaintiff] now
seeks judicial review was presented to, and considered by, Commerce during the administrative
review”; emphasizing, inter alia, that “Commerce had [a] full opportunity to consider the . . . issue
[raised by plaintiff in litigation] during the administrative review”); Jinan Yipin, 31 CIT at 1938-
40, 526 F. Supp. 2d at 1379-81 (recognizing that “[t]he court may excuse a party’s failure to raise
an argument before the administrative agency if . . . the agency in fact considered the issue,” and
excusing failure to exhaust where “[plaintiff’s] failure to raise [its] claims [at the administrative
level] did not prevent Commerce from actually considering . . . [the] issues at the agency level”;
noting that “[a]lthough [plaintiff] did not raise arguments [as to two issues] below, Commerce
actually considered [those] issues at the agency level through the arguments of [other parties]”);
Holmes Products Corp. v. United States, 16 CIT 1101, 1103-04 (stating that “[a] party may be
excused from failure to raise an argument before the administrative agency as long as the agency
Court No. 13-00044                                                                                   Page 43



        The record here leaves no doubt that Commerce had an opportunity to consider the

potential for double counting of energy inputs as a result of the agency’s inclusion of coal in the

factors of production database, in tandem with its use of P.T. Tifico’s financial statements.32 As


in fact considered the issue. Thus, exhaustion may be excused . . . if it is clear that the agency had
an opportunity to consider [the issue that a plaintiff seeks to raise]” (citations omitted)); Timken,
16 CIT at 437-38, 795 F. Supp. at 445 (excusing plaintiff’s failure to exhaust, emphasizing that
“[w]hile it may be true that [plaintiff] did not raise this issue below, it is certain . . . that the [agency]
addressed it in its Final Results”); SKF, 15 CIT at 159 n.6, 762 F. Supp. at 350 n.6 (excusing
plaintiff’s failure to exhaust where agency itself addressed issue in recalculations in agency’s Final
Determinations); Al Tech Specialty Steel, 11 CIT at 377 n.5, 661 F. Supp. at 1210 n.5 (recognizing
exception to doctrine of exhaustion for “issues not properly raised but in fact considered by the
administrative body”).

        The Domestic Producer attempts to distinguish the facts of this case from two of the cases
cited above. See generally Def.-Int.’s Supp. Response Brief at 9-10 (discussing, and seeking to
distinguish, Valley Fresh Seafood and Jinan Yipin). The distinction that the Domestic Producer
seeks to draw, however, rests mainly on its claim that, in this case, Commerce had no opportunity
to consider the potential double counting of coal – a claim that is, as discussed above, simply
incorrect. More generally, as previously noted, the facts of every case differ and none of the cases
cited above perfectly parallels the case at bar. But it is not possible for the Domestic Producer to
distinguish all of the cases on point. And, in any event, there is a broader current of thought that
runs through the cases cited, and compelling considerations of policy, pragmatism, and
fundamental fairness that undergird them, which the Domestic Producer does not address. See
generally nn.23, 27, & 28, supra.
        32
         The Government and the Domestic Producer repeatedly assert that Commerce had no
opportunity to consider whether, in the Final Results, coal should be excluded from the factors of
production database and whether double counting would otherwise result. However, such
assertions by the Government and the Domestic Producer cannot be reconciled with other
statements that they make, where they claim (in essence) that Commerce in fact did consider
excluding coal from the database and/or the potential for double counting, but ultimately rejected
those concerns and made a reasoned and (according to the Government and the Domestic
Producer) a reasonable decision that coal should be included in the database.

        Compare, e.g., Def.’s Response Brief at 5-6 (asserting that “Commerce was deprived of
the opportunity to address” Zhaoqing Tifo’s argument that “the failure to exclude steam coal from
the factors of production is unsupported by substantial evidence”); id. at 7 (asserting that,
“[b]ecause Zhaoqing Tifo did not raise [its] argument [that Commerce double counted the value
for steam coal because it was also included as part of factory overhead] in its case brief, Commerce
Court No. 13-00044                                                                              Page 44




did not have the opportunity to address [the] argument”); id. at 10 (asserting that “[b]ecause
Zhaoqing Tifo chose not to raise [its] argument [that “assign[ing] a surrogate value to steam coal,
instead of excluding it from the factors of production, results in double counting”] during the
administrative proceedings, it deprived Commerce of the opportunity to make a determination,
finding, or conclusion with respect to this argument in the final results”); id. at 12 (asserting that
“Zhaoqing Tifo chose not to object to Commerce’s calculation of normal value with steam coal
included as a factor of production,” and that Commerce therefore “was deprived of the opportunity
to address that argument in the final results”); id. at 14 (referring to “Commerce’s failure to
address” whether steam coal should be excluded from the factors of production database); Def.’s
Supp. Brief at 12 (asserting that “[h]ad Zhaoqing Tifo properly framed the issue in its case brief,
Commerce could have addressed the treatment of steam coal under P.T. Tifico’s financial
statement in the final results”); id. (asserting that “Commerce did not have the benefit of advocacy
from all parties on [“the proper treatment of energy factors by Commerce under P.T. Tifico’s
financial statement”] prior to the final results”); id. at 14 (asserting that “Zhaoqing Tifo’s
submission of a timely argument in its case brief would have given Commerce the opportunity to
consider and address the issue” of the alleged need to “treat steam coal as part of overhead” if the
Final Results relied on P.T. Tifico’s financial statements); Def.-Int.’s Response Brief at 19
(asserting that “[i]f Zhaoqing Tifo had timely raised the double-counting issue before Commerce,
. . . Commerce would have had the benefit of the advocacy of the parties”); Def.-Int.’s Supp. Brief
at 2 (stating that “Commerce did not address double counting of coal”); Def.-Int.’s Supp. Response
Brief at 2 (asserting that Commerce “neither double-counted coal nor addressed double-counting
of coal” in the Final Results); id. at 4 (asserting that Commerce “neither considered nor addressed
the double-counting of coal” in the Final Results, because, according to Domestic Producer, “no
party had raised it in their case briefs”); id. at 8 n.25 (asserting that Commerce “did not address or
consider [the] issue [of “the double-counting of coal”] in its Final Results”); id. at 10 (asserting
that, “[b]ecause no party briefed the issue of double-counting coal, . . . [Commerce] neither
considered nor addressed that issue in its Final Results”); Def.-Int.’s Brief on Supp. Authority at
13 (asserting that “Zhaoqing Tifo did not raise the double-counting coal issue in its administrative
case . . . brief[] . . . , and Commerce was deprived of the opportunity to consider and respond to
any such argument”); with Def.’s Response Brief at 1 (referring to “Commerce’s decision to assign
a surrogate value to steam coal, instead of excluding steam coal from the factors of production”)
(emphasis added); id. at 5 (asserting that Commerce included steam coal as a factor of production
“because there is no record evidence that steam coal is included in PT Tifico’s surrogate financial
statement as part of factory overhead”); id. at 6 (asserting that “Commerce reasonably determined
that steam coal in this context is not a general expense, but rather is a direct input in the production
of polyester staple fiber”); id. at 19 (asserting that, “[s]team coal energy is used to melt
polyethylene terephthalate chips and polypropylene chips at the melting or spinning stage of
production,” and that, therefore, in the Final Results, “Commerce determined that steam coal is
not a general expense, and, thus, it should be considered among the factors of production and not
as factory overhead”); id. at 21 (referring to “Commerce’s finding that steam coal is a direct input
in the production process and should be valued as a factor of production”); Def.-Int.’s Response
Brief at 20 (asserting that “Commerce excluded electricity and water costs from the [factors of
Court No. 13-00044                                                                              Page 45




production] database because it reasonably concluded . . . that those factors were accounted for in
P.T. Tifico’s manufacturing overhead,” and, in contrast, “reasonably concluded that . . . coal was
not included in P.T. Tifico’s manufacturing overhead”); id. at 21 (asserting that “it was
Commerce’s intention to include the coal in the [factors of production] database, consistent with
the statute and [the agency’s] longstanding practice of including energy and direct material factors
in the [factors of production] database”); id. at 23 (asserting that “Commerce reasonably concluded
that P.T. Tifico included electricity and water, but did not include coal, in its overhead”); id.
(asserting that “it was reasonable for Commerce to conclude that any coal that P.T. Tifico may use
was included in the cost of materials held in inventory, rather than manufacturing overhead”); id.
at 24 (asserting that “[c]onsistent with its practice to include in the [factors of production] database
inputs that are used in significant volumes in the production of subject merchandise, Commerce
reasonably included coal, but not electricity or water”); Def.-Int.’s Supp. Brief at 12 (asserting that
“Commerce applied its longstanding and established practice with regard to calculating normal
value under its [factors of production] methodology – including its practice to only turn off energy
inputs when record evidence demonstrates that doing so would result in double-counting and its
practice to treat significant inputs as direct materials in its [factors of production] methodology”);
id. at 22-23 (asserting that, “in the Final Results, Commerce included coal in the [factors of
production] database, but excluded the electricity and water factors . . . because Commerce found
that [P.T.] Tifico’s financial statement did not breakout electricity and water, and there was no
evidence that coal was included in P.T. Tifico’s manufacturing overhead”); Def.-Int.’s Response
Brief on Supp. Authority at 3 (asserting that Commerce “excluded electricity (the energy [factor
of production]) but included coal (a direct material input in the production of polyester staple fiber
. . . ) in the normal value in the Final Results based on its longstanding practice and because there
was no indication that coal was used by the surrogate financial ratio company” (i.e., P.T. Tifico)).

        The Government and the Domestic Producer cannot have it both ways. They cannot
logically claim both that Commerce was deprived of the opportunity to consider the asserted need
to exclude coal from the factors of production database and the potential for double counting, and
also simultaneously argue that Commerce reached a deliberate determination on those points. It
is possible to argue in the alternative. But these are matters of fact.

        Moreover, it is one thing for counsel to seek to “prop up” an agency determination through
subtle suggestions that an agency’s determination could be sustained on the basis of record
evidence and arguments that the agency itself did not cite. See section III.C, infra (rejecting
various arguments by the Government and Domestic Producer as impermissible post hoc
rationale). It is another matter entirely to affirmatively state – as the Government and the Domestic
Producer do, at the citations noted above – that the agency in fact considered points and reasoned
its way to a decision when the record is devoid of any indication whatsoever that the agency did
so. Taking such liberties with the record goes well beyond the limits of zealous advocacy. See
nn.21 & 29, supra.
Court No. 13-00044                                                                             Page 46



discussed immediately above, the double counting issue was raised at a minimum by the Domestic

Producer – and the fact that Commerce thus had an opportunity to consider the issue in the Final

Results would alone suffice to preserve Zhaoqing Tifo’s right to pursue its double counting claim

in this forum. But, in addition, the record further makes it clear that Commerce in fact considered

the potential for double counting, at least as to some energy inputs.

       Specifically, Commerce’s Issues and Decision Memorandum recognizes that “P.T. Tifico’s

financial statement does not break out energy [costs].” Issues & Decision Memorandum at 14.

Therefore, “in order to prevent double counting” (by having electricity and water both captured in

the surrogate financial ratios and also included in the factors of production database), Commerce

“placed all electricity and water costs into the [manufacturing/factory] overhead numerator” in the

financial ratios, and removed from the factors of production database the “electricity and water

[costs]” that the agency had included in the database in the Preliminary Results. Id. at 11; see also

Final Results, 78 Fed. Reg. at 2367 (stating that Commerce “did not separately value electricity

and water in the final margin program because these factors of production are already captured in

the surrogate financial ratios”). However, Commerce did not address any potential double

counting of the “other energy factors” (beyond water and electricity) to which the Domestic

Producer’s rebuttal brief referred. See, e.g., Domestic Producer’s Administrative Rebuttal Brief




        Absent telepathy, it is impossible to know what was in the minds of Commerce decision-
makers as they prepared the Final Results. In any event, even if Commerce did consider the
possibility of excluding coal from the factors of production database and/or the potential for double
counting (as it had the opportunity to do), the fact remains that there is no rationale articulated for
any such determination and no evidence cited to support it.
Court No. 13-00044                                                                           Page 47



at 14 (stating that P.T. Tifico’s financial statements have “no breakout for electricity, water or

other energy factors”) (emphasis added).

       As such, even assuming arguendo that the doctrine of exhaustion did apply, any failure to

exhaust by Zhaoqing Tifo would be excused, because Commerce was not deprived of the

opportunity to address the double counting of energy inputs in the Final Results. In fact,

Commerce’s Final Results did address double counting – albeit only as to electricity and water,

and not coal or natural gas or any other source of energy.33


       33
         Zhaoqing Tifo argues that, in any event, it is well settled that the application of the
doctrine of exhaustion in an international trade case is a matter that is committed to the court’s
sound discretion. See Pl.’s Reply Brief at 5-7; Pl.’s Supp. Brief at 30-31; Pl.’s Brief on Supp.
Authority at 5; 28 U.S.C. § 2637(d) (providing that “the Court of International Trade shall, where
appropriate, require the exhaustion of administrative remedies”) (emphasis added).

        Accordingly, even if the doctrine of exhaustion were to apply here, and even if it were
determined that Zhaoqing Tifo had failed to exhaust and that such failure was not excused by any
of the exceptions discussed above, Zhaoqing Tifo nevertheless could be permitted to litigate its
double counting claim, subject to the court’s discretion. See, e.g., Essar Steel, 753 F.3d at 1374
(acknowledging that application of doctrine of exhaustion is subject to discretion of Court of
International Trade); Itochu Building Prods. v. United States, 733 F.3d 1140, 1145, 1148 (Fed.
Cir. 2013) (recognizing that Court of International Trade’s application of exhaustion doctrine is
matter of “discretion,” subject to appellate review only pursuant to “the demanding abuse-of-
discretion standard”); Yangzhou Bestpak Gifts & Crafts, 716 F.3d at 1381 (same); Ningbo Dafa,
580 F.3d at 1259 (noting that Court of Appeals has “held that applying exhaustion principles in
trade cases is subject to the discretion of the judge of the Court of International Trade”) (citation
omitted); Agro Dutch Industries Ltd. v. United States, 508 F.3d 1024, 1029 (Fed. Cir. 2007)
(quoting Corus Staal for principle that “application of ‘exhaustion principles in trade cases is
subject to the discretion of the judge of the Court of International Trade’”); Corus Staal, 502 F.3d
at 1381 & n.5 (same; sustaining trial court determination that party failed to exhaust, and
underscoring breadth of trial court’s discretion by expressly noting that determination that trial
court did not abuse its discretion in finding failure to exhaust “does not imply that the court would
have abused its discretion if it had excused [the party] from having to exhaust its administrative
remedies”); Norsk Hydro Canada, Inc. v. United States, 472 F.3d 1347, 1356 n.17 (Fed. Cir. 2006)
(citing Court of International Trade’s “discretion” as to whether or not to “impose an ‘exhaustion’
requirement under 28 U.S.C. § 2637(d)”); Consol. Bearings, 348 F.3d at 1003 (referring to
“discretion” of Court of International Trade in application of exhaustion); CEMEX, 133 F.3d at
Court No. 13-00044                                                                              Page 48




                               B. The Doctrine of Judicial Estoppel

       Apart from its invocation of the doctrine of exhaustion of administrative remedies, the

Domestic Producer also contends that Zhaoqing Tifo’s double counting claim is independently

barred by the doctrine of judicial estoppel. See generally Def.-Int.’s Supp. Brief at 1, 2, 23-25;

Defendant-Intervenor’s Supplemental Response Brief at 12, 15 (“Def.-Int.’s Supp. Response

Brief”); Def.-Int.’s Brief on Supp. Authority at 8-9. Like the exhaustion arguments analyzed

above, this argument too is lacking in merit.

       The gravamen of judicial estoppel is that, “[a]bsent any good explanation, a party should

not be allowed to gain an advantage by litigation on one theory, and then seek an inconsistent

advantage by pursuing an incompatible theory.” 18B C. Wright, A. Miller, & E. Cooper, Federal

Practice and Procedure § 4477, at 553 (2d ed. 2002) (“Wright, Miller, & Cooper”) (earlier edition

quoted in New Hampshire v. Maine, 532 U.S. 742, 749 (2001)).34 In the seminal case, Davis v.

Wakelee, the Supreme Court explained:

       [W]here a party assumes a certain position in a legal proceeding, and succeeds in
       maintaining that position, he may not thereafter, simply because his interests have
       changed, assume a contrary position, especially if it be to the prejudice of the party
       who has acquiesced in the position formerly taken by him.




905 (explaining that, as to international trade cases, “Congress has not clearly required exhaustion”
(citation omitted)).
       34
          See also 18 J. Moore et al., Moore’s Federal Practice § 134.30, at 134-63 (3d ed. 2014)
(stating that “[t]he doctrine of judicial estoppel prevents a party from asserting a claim in a legal
proceeding that is inconsistent with a claim taken by that party . . . in a previous proceeding”
(footnote omitted)) (earlier edition quoted in New Hampshire v. Maine, 532 U.S. at 749).
Court No. 13-00044                                                                          Page 49



Davis v. Wakelee, 156 U.S. 680, 689 (1895) (quoted in New Hampshire v. Maine, 532 U.S. at

749). Thus, judicial estoppel “generally prevents a party from prevailing in one phase of a case

on an argument and then relying on a contradictory argument to prevail in another phase.” Pegram

v. Herdrich, 530 U.S. 211, 227 n.8 (2000).

       The Domestic Producer argues, in essence, that Zhaoqing Tifo is judicially estopped from

claiming in this forum that coal should not be included in the factors of production database,

because – according to the Domestic Producer – Zhaoqing Tifo claimed at the administrative level

that coal should be included in the database. See generally Def.-Int.’s Supp. Brief at 1, 2, 23-25;

Def.-Int.’s Supp. Response Brief at 12, 15; Def.-Int.’s Brief on Supp. Authority at 8-9. That

argument fails for several reasons.

       As an initial matter, raising an argument for the first time in supplemental briefing is much

too late. Even if the Domestic Producer’s judicial estoppel argument had been made in a timely

fashion, however, it would have fared no better.

       As the Supreme Court observed in New Hampshire v. Maine, judicial estoppel applies only

where “a party’s later position . . . [is] ‘clearly inconsistent’ with its earlier position.” New

Hampshire v. Maine, 532 U.S. at 750 (citations omitted); see also Hill-Rom Services, Inc. v.

Stryker Corp., 755 F.3d 1367, 1380-82 (Fed. Cir. 2014) (same). This is not such a case.

       As detailed above, contrary to the assertions of the Government and the Domestic

Producer, Zhaoqing Tifo did not affirmatively argue at the administrative level that coal should be

included in the factors of production database. Instead, on the assumption that Commerce would

continue to rely on P.T. Asia Pacific’s financial statements in the Final Results and thus would

also continue to include coal in the factors of production database (as Commerce did in the
Court No. 13-00044                                                                           Page 50



Preliminary Results), Zhaoqing Tifo argued that Commerce should use a certain set of data (i.e.,

coal prices from the Indonesian Ministry of Energy and Mineral Resources) in lieu of the

Indonesian import statistics that Commerce used to value coal in the Preliminary Results. See,

e.g., n.21, supra (rejecting assertions of Government and Domestic Producer that Zhaoqing Tifo

affirmatively advocated for inclusion of coal in factors of production database). That is precisely

the same position that Zhaoqing Tifo presses in this litigation; and it is the subject of Count V of

the Complaint (which is not at issue in the pending motion). See Complaint, Count V (contesting

“the surrogate value of coal” that was used in the Final Results, if court determines that including

a surrogate value for coal in the factors of production database “[was] legally valid”); n.18, supra

(explaining that pending motion is addressed solely to Counts I-IV of Complaint). Accordingly,

contrary to the Domestic Producer’s judicial estoppel argument, Zhaoqing Tifo is not “blowing

hot and cold.” And, because there is no inconsistency between Zhaoqing Tifo’s position in

litigation and its position at the administrative level, judicial estoppel does not apply.

       In addition, there is yet a third reason why the Domestic Producer’s judicial estoppel claim

must fail. The Supreme Court has emphasized that judicial estoppel applies only where the party

sought to be estopped “has succeeded in persuading a court to accept that party’s earlier position.”

New Hampshire v. Maine, 532 U.S. at 750; see also Hill-Rom Services, 755 F.3d at 1380 (same).35

As the Supreme Court has pointed out, “[a]bsent success in a prior proceeding, a party’s later




       35
        Although the point is not entirely settled, it is generally accepted that judicial estoppel
may apply where the prior inconsistent position was asserted before an agency (as the Domestic
Producer alleges here). See 18B Wright, Miller, & Cooper § 4477, at 575 n.41 (citing, inter alia,
Lampi Corp. v. American Power Products, Inc., 228 F.3d 1365, 1377 (Fed. Cir. 2000)).
Court No. 13-00044                                                                            Page 51



inconsistent position introduces no ‘risk of inconsistent . . . determinations,’ and thus poses little

threat to judicial integrity.” New Hampshire v. Maine, 532 U.S. at 750-51 (citations omitted).

         Here, however, Zhaoqing Tifo did not prevail at the administrative level. Zhaoqing Tifo’s

arguments notwithstanding, the Final Results rejected the coal prices from the Indonesian Ministry

of Energy and Mineral Resources that Zhaoqing Tifo proffered and instead continued to value coal

using the same Indonesian import statistics that Commerce had used in the Preliminary Results.

See Issues & Decision Memorandum at 5, 8 (Comment 1) (stating that Final Results continue to

value coal using Indonesian import statistics relied on in Preliminary Results). Because Zhaoqing

Tifo did not “succeed in persuading [Commerce] to accept [Zhaoqing Tifo’s] . . . position” (an

agency determination that Zhaoqing Tifo contests in Count V), judicial estoppel cannot apply –

not even as to Count V of the Complaint, which (again) is not the subject of the pending motion.

Judicial estoppel thus is no bar to consideration of the merits of Zhaoqing Tifo’s double counting

claim.


                   C. The Merits of Zhaoqing Tifo’s “Double Counting” Claim

         Although the administrative rebuttal brief that the Domestic Producer filed with Commerce

put the agency on notice that P.T. Tifico’s financial statements include “no breakout for electricity,

water or other energy factors” and argued that – in order to avoid double counting – the use of

those financial statements in the Final Results would require the agency to exclude all energy

inputs from the factors of production database, there is no dispute that Commerce removed only

water and electricity, leaving coal in the database. See Domestic Producer’s Administrative

Rebuttal Brief at 14; see also id. at 13-14 (emphasizing that P.T. Tifico’s financial statements
Court No. 13-00044                                                                           Page 52



“include[] no separate breakout of the company’s energy costs”); id. at 14 (arguing that use of

P.T. Tifico’s financial statements in Final Results would require agency “to place all potential

energy costs into the [manufacturing/factory] overhead numerator [i.e., to account for all potential

energy costs in the surrogate financial ratios] and turn off [i.e., to exclude from the factors of

production database] all company-specific energy and water consumption factors, in order to

capture all costs while also preventing double-counting”); id. (highlighting lack of “electricity,

water or any other energy-specific data in [P.T. Tifico’s] financial statements”).36

       In its Issues and Decision Memorandum, Commerce acknowledged that “P.T. Tifico’s

financial statement does not break out energy [inputs].” Issues & Decision Memorandum at 13-

14; see also id. at 11 (stating that “P.T. Tifico’s financial statement does not include a separate

breakout of its costs for electricity and water”). Recognizing that fact, the Issues and Decision

Memorandum expressly addressed the potential for double counting and the need to avoid double

counting by excluding energy sources from the factors of production database – but only as to

water and electricity, and not as to coal or natural gas or any other energy inputs.

       The Issues and Decision Memorandum thus explained that, “in order to prevent double

counting,” the Final Results “placed all electricity and water costs into the [manufacturing/factory]

overhead numerator” (i.e., accounted for all electricity and water costs by including them in the


       36
          As outlined above, Zhaoqing Tifo would be entitled to litigate the merits of its double
counting claim even if the Domestic Producer had not alerted Commerce to the issue at the
administrative level. See generally section III.A.1, supra (explaining that Zhaoqing Tifo was not
required to raise double counting issue at the administrative level because that issue did not arise
until the Final Results); section III.A.2, supra (explaining that failure to exhaust was excused
because Commerce in fact had opportunity to address issue); see also n.20 (summarizing argument
that Zhaoqing Tifo exhausted its administrative remedies in its administrative case brief); n.33
(explaining that application of doctrine of exhaustion is committed to court’s sound discretion).
Court No. 13-00044                                                                                Page 53



surrogate financial ratios) and removed from the factors of production database the “electricity and

water consumption factors” that Commerce had included in the database for purposes of the

Preliminary Results. Issues & Decision Memorandum at 11; see also Final Results, 78 Fed. Reg.

at 2367 (stating that Commerce “did not separately value electricity and water in the final margin

program because these factors of production are already captured in the surrogate financial

ratios”). Similarly, elsewhere in the Issues and Decision Memorandum (discussing the surrogate

value for water), Commerce explained that “[b]ecause P.T. Tifico’s financial statement does not

break out energy, consistent with [Commerce’s] practice, [the Final Results] will not separately

value water in the margin program, as it is already captured in the surrogate financial ratios.”

Issues & Decision Memorandum at 13-14 (footnote omitted).

        Conspicuously absent from the Final Results, however, is any explanation for Commerce’s

treatment of coal or natural gas or any “other energy factors” beyond water and electricity to which

the Domestic Producer’s administrative rebuttal brief referred.             See Domestic Producer’s

Administrative Rebuttal Brief at 14 (stating that P.T. Tifico’s financial statements include “no

breakout for electricity, water or other energy factors”) (emphasis added).              Zhaoqing Tifo

maintains that there are no grounds for treating coal differently than water and electricity, and that

Commerce’s inclusion of coal in the factors of production database for purposes of the Final

Results led to the double counting of energy inputs, because – according to Zhaoqing Tifo – like

electricity and water, other energy inputs (such as natural gas) also are embedded in the surrogate

financial ratios. See, e.g., Pl.’s Brief at 3, 4, 6-7, 8-9, 11, 16, 20-21, 22, 23; Pl.’s Reply Brief at 1-

2, 13-15, 22. Commerce’s Issues and Decision Memorandum is mum on these points.
Court No. 13-00044                                                                             Page 54



       Commerce’s Issues and Decision Memorandum does not explain, for example, why the

agency singled out electricity and water, and did not address the “other energy factors” referenced

in the Domestic Producer’s administrative rebuttal brief. Commerce does not explain the agency’s

rationale for excluding electricity and water from the factors of production database, but not coal.

Commerce offers no justification for the difference in treatment. Similarly, Commerce does not

explain why including coal in the factors of production database does not result in the double

counting of energy inputs. It is the absence of “a separate breakout of . . . costs for electricity and

water” in P.T. Tifico’s financial statements that led Commerce to exclude those inputs from the

factors of production database for purposes of the Final Results. But nowhere does Commerce

identify the “separate breakout” of other energy inputs (such as natural gas) in P.T. Tifico’s

financial statements that might serve as a basis for an agency determination that such inputs are

not captured in the surrogate financial ratios and that coal may be included in the factors of

production database without fear of double counting. Nowhere does Commerce explain why its

concerns about the double counting of electricity and water do not also extend to coal (and any

other energy sources, such as natural gas).

       In their briefs filed with the court, the Government and the Domestic Producer argue at

some length that Commerce properly included coal in the factors of production database and that

Commerce reasonably treated coal differently than electricity and water. See generally Def.’s

Response Brief at 6, 15-21; Def.-Int.’s Response Brief at 2, 13-25.37 They argue, for example, that



       37
         See also Def.-Int.’s Brief on Supp. Authority at 12-13; Def.’s Response Brief on Supp.
Authority at 3-4; Def.-Int.’s Response Brief on Supp. Authority at 3-5.
Court No. 13-00044                                                                           Page 55



Commerce “distinguishes between energy inputs that are general expenses (i.e., not direct costs)

accounted for in [manufacturing/]factory overhead, and energy inputs that are direct inputs in the

production process and that are not accounted for in [manufacturing/]factory overhead.” Def.’s

Response Brief at 18; see also Def.-Int.’s Response Brief at 21 (similar). They state that

“Commerce looks at how [an] energy input is used and then determines on a case-by-case basis

whether (1) to exclude that input because it is accounted for by [manufacturing/]factory overhead,

or (2) to include it as a factor of production.” Def.’s Response Brief at 19; see also Def.-Int.’s

Response Brief at 18 (similar).

       The Government and the Domestic Producer assert that Commerce’s preference is to value

energy inputs in the factors of production database, particularly when the energy sources are

“direct inputs in the production process.” Def.’s Response Brief at 18; see also Def.-Int.’s

Response Brief at 18, 21, 24 (similar). They further assert that “Commerce’s practice is to exclude

energy inputs from the factors of production [database] when they are used in the general running

of the business – i.e., in offices, bathrooms, and other facilities – as opposed to being used in the

direct production of the subject merchandise.” Def.’s Response Brief at 17; see also Def.-Int.’s



        According to the Domestic Producer, “the relevant [Commerce] practices are: . . . (b)
Commerce’s standard practice to include [factors of production], including energy inputs, in the
[factors of production] database unless [Commerce] knows that doing so would result in double-
counting; (c) when it is not definitive whether [a factor of production] is included in the surrogate
financial ratios, Commerce utilizes the best information available, on a case-by-case basis, to
determine whether to include that factor in the [factors of production] database or the financial
ratio; (d) Commerce’s practice to treat significant inputs, such as coal in this case, as direct
materials in its [factors of production] methodology; and (e) Commerce has a preference for
valuing respondents’ own energy inputs as [factors of production] when such inputs are part of an
energy-intensive process.” Def.-Int.’s Response Brief on Supp. Authority at 3-4.
Court No. 13-00044                                                                            Page 56



Response Brief at 18, 24 (similar). They state that, here, Commerce “determined that PT Tifico’s

surrogate financial statements likely included water and electricity in its general expenses, and

specifically in its [manufacturing/]factory overhead.” Def.’s Response Brief at 17; see also Def.-

Int.’s Response Brief at 20, 23 (similar). And they claim that, in contrast, “coal is used as a direct

input and, consequently, would not be accounted for within [manufacturing/]factory overhead

expenses.”     Def.’s Response Brief at 20; see also Def.-Int.’s Response Brief at 18-19, 23

(similar).38 Further, while the Government is basically silent on the matter, the Domestic Producer

argues that there is no record evidence that energy was double counted in Commerce’s

calculations. Def.-Int.’s Response Brief at 2, 17-18, 22. But see Pl.’s Reply Brief at 9, 13-21

(disputing claims of Government and Domestic Producer that Commerce properly included coal

in the factors of production database and that Commerce reasonably treated coal differently than

electricity and water); [Plaintiff’s] Supplemental Authority Regarding Exhaustion of

Administrative Remedies at 3-4 (“Pl.’s Brief on Supp. Authority”) (same); [Plaintiff’s] Response

to Notice of Supplemental Authority Regarding Exhaustion of Administrative Remedies at 11-12

(same).

          Without regard to the accuracy or reasonableness of the representations made by the

Government and the Domestic Producer, the bottom line is that none of this information appears

in Commerce’s Issues and Decision Memorandum. The sundry reasons and explanations and

justifications offered by the Government and the Domestic Producer in their briefs thus constitute


          38
         As noted above, it appears that P.T. Tifico does not use coal, but uses natural gas (and
perhaps other energy sources as well), which Zhaoqing Tifo does not use. The fact that P.T. Tifico
does not use coal obviously does nothing to diminish any concerns about the potential double
counting of energy inputs. Clearly P.T. Tifico uses some energy source for its production process.
Court No. 13-00044                                                                            Page 57



impermissible post hoc rationale. Litigation counsel’s attempts at “backfill” are no substitute for

an agency’s own reasoned decisionmaking on the administrative record. Burlington Truck Lines,

371 U.S. at 168-69; Abbott Laboratories v. United States, 573 F.3d 1327, 1332-33 & n.1 (Fed. Cir.

2009). It is black letter law that an agency’s action may be upheld, if at all, only on the grounds

articulated by the agency itself. State Farm, 463 U.S. at 50. As such, the arguments made and the

information supplied by the Government and the Domestic Producer cannot be credited. See

generally Pl.’s Reply Brief at 9-10, 21.

       The long and the short of it is that the Issues and Decision Memorandum (and, more

generally, the Final Results) give no indication whether Commerce ever considered the potential

for double counting of energy inputs other than electricity and water, much less the rationale for

any determination on that issue. Commerce’s explanation is not merely thin; it is non-existent. It

thus cannot be said that “the agency’s path may reasonably be discerned.” State Farm, 463 U.S.

at 43 (citation omitted). Moreover, the absence of any articulated rationale for Commerce’s

inclusion of coal in the factors of production database (given any potential for double counting)

precludes any assessment of the substantiality of the evidence in support of the agency’s action, as

well as any evaluation as to whether that action was arbitrary and capricious.

       Zhaoqing Tifo asks that this matter be remanded to Commerce “with specific limiting

instructions” directing the agency “to remove the coal energy factor from the [factors of

production] database and recalculate Zhaoqing Tifo’s antidumping duty margin.” Pl.’s Brief at

23; Pl.’s Reply Brief at 10, 22. However, particularly in light of the procedural posture of the case,

such relief is not warranted.
Court No. 13-00044                                                                           Page 58



       Instead, this matter is remanded to Commerce to permit the agency to reconsider its

determination on the inclusion of coal in the factors of production database and to expressly

consider any associated potential for double counting of energy inputs, explaining its reasoning

fully and with reference to the record evidence. In the interests of due process and fundamental

fairness, Commerce is encouraged to reopen the administrative record on remand, to ensure that

the Remand Results are based on an appropriate record and to allow the parties an adequate

opportunity to place on the record, for the consideration of the agency, information to illuminate

or clarify key points such as the energy sources that P.T. Tifico uses in its production of polyester

staple fiber, whether P.T. Tifico uses those energy sources for any other purpose, and how the

sources are treated in P.T. Tifico’s financial statements and in the surrogate financial ratios that

Commerce derived from the financial statements for use in the Final Results (including whether

there is any potential for double counting).


                                         IV. Conclusion

       For the reasons set forth above, Plaintiff’s Motion for Judgment on the Agency Record

must be granted and this matter remanded to the U.S. Department of Commerce for further action

not inconsistent with this opinion.

       A separate order will enter accordingly.


                                                             /s/ Delissa A. Ridgway
                                                               Delissa A. Ridgway
                                                                      Judge

Dated: April 9, 2015
       New York, New York
