                                            Slip Op. 11-100

             UNITED STATES COURT OF INTERNATIONAL TRADE
__________________________________________
                                           :
TIANJIN MAGNESIUM                          :
INTERNATIONAL CO., LTD.,                   :
                                           :
                  Plaintiff,               :
                                           :
            v.                             : Before: Jane A. Restani, Judge
                                           :
UNITED STATES,                             : Court No. 09-00535
                                           :
                  Defendant,               :
                                           :
            and                            :
                                           :
US MAGNESIUM LLC,                          :
                                           :
                  Intervenor Defendant.    :
__________________________________________:

                                          OPINION

[Judgment sustaining remand results setting an AFA antidumping duty rate will be entered.]

                                                                        Dated: August 10, 2011

              Riggle and Craven (David A. Riggle, Lei Wang, and Saichang Xu) for the
plaintiff.

               Tony West, Assistant Attorney General; Jeanne E. Davidson, Director, Patricia M.
McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department
of Justice (David S. Silverbrand and Renee A. Gerber); Thomas M. Beline, Office of the Chief
Counsel for Import Administration, U.S. Department of Commerce, of counsel, for the
defendant.

               King & Spalding, LLP (Stephen A. Jones, Jeffery B. Denning, and Joshua M.
Snead) for the intervenor defendant.

              Restani, Judge: This matter comes before the court following its decision in

Tianjin Magnesium Int’l Co. v. United States, Slip Op. 2011-17, 2011 Ct. Int’l Trade LEXIS 16
Court No. 09-00535                                                                           Page 2


(CIT Feb. 11, 2011), in which the court remanded Pure Magnesium from the People’s Republic

of China: Final Results of Antidumping Duty Administrative Review, 74 Fed. Reg. 66,089

(Dep’t Commerce Dec. 14, 2009) (“Final Results”), instructing the United States Department of

Commerce (“Commerce”) to make a finding as to whether plaintiff Tianjin Magnesium

International Co., Ltd. (“TMI”) cooperated to the best of its ability in its antidumping (“AD”)

review. Tianjin Magnesium Int’l, 2011 Ct. Int’l Trade LEXIS 16, at *18. For the reasons stated

below, the court sustains the Final Results of Redetermination Pursuant to Court Remand Pure

Magnesium from the People’s Republic of China (Dep’t Commerce May 12, 2011) (“Remand

Results”) (Docket No. 63). In accordance with this conclusion, the court now reaches the

remaining issues raised by TMI’s motion for judgment on the agency record challenging the

legality of the adverse facts available (“AFA”) rate assigned to it by Commerce and rejects these

claims as well.

                                          BACKGROUND

                  The facts of this case have been well documented in the court’s previous opinion.

See Tianjin Magnesium Int’l, 2011 Ct. Int’l Trade LEXIS 16, at *2–5. The court presumes

familiarity with that decision, but briefly summarizes the facts relevant to this opinion.

                  In July 2008, Commerce initiated an administrative review of its AD order on

pure magnesium from the People’s Republic of China (“PRC”). Initiation of Antidumping and

Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 73 Fed. Reg.

37,409, 37,409 (Dep’t Commerce July 1, 2008). During verification, Commerce concluded that

certain documents supplied by TMI, the only respondent, were unreliable and assigned it an AFA
Court No. 09-00535                                                                            Page 3


rate of 111.73%. See Issues and Decision Memorandum for the Final Results of the 2007-2008

Administrative Review of Pure Magnesium from the People’s Republic of China, A-570-832,

POR 5/1/2007–4/30/2008, at 10 (Dep’t Commerce Dec. 7, 2009) (“Issues and Decision

Memorandum”), available at http://ia.ita.doc.gov/frn/summary/PRC/E9-29727-1.pdf (last visited

Aug. 2, 2011); Final Results, 74 Fed. Reg. at 66,090. In making this determination, Commerce

based its application of AFA on a finding that TMI’s producers “failed to cooperate to the best of

their ability.” Final Results, 74 Fed. Reg. at 66,090.

               In December 2009, TMI filed a complaint challenging the Final Results on

various grounds. TMI then moved for judgment on the agency record, claiming that Commerce

improperly assigned it an AFA rate based on a finding of its unaffiliated producer’s

uncooperative behavior, that the AFA rate of 111.73% is contrary to law and not supported by

substantial evidence, and that its due process rights had been violated. See Mot. for J. on the

Agency R. Submitted by Pl. Tianjin Magnesium Int’l Co., Ltd. Pursuant to Rule 56.2 of the Rules

of the U.S. Court of Int’l Trade (“Pl.’s Br.”) 3. Upon considering these arguments, the court held

that “Commerce’s decision to apply AFA to TMI . . . was in violation of 19 U.S.C. § 1677e(b)

because it did not make a fail[ure] to cooperate finding as to the actual respondent, TMI.”

Tianjin Magnesium Int’l, 2011 Ct. Intl. Trade LEXIS 16, at *8–9 (alteration in original) (internal

quotation marks omitted). In addition, the court denied TMI’s motion as to its due process

claims. Id. at *18. The court, however, did not reach TMI’s corroboration arguments because

consideration of those issues, absent a finding that TMI failed to cooperate, was premature. See

id. at 11 n.7. Thus, the court ordered a remand, instructing Commerce “to either find that TMI
Court No. 09-00535                                                                              Page 4


failed to cooperate to the best of its ability and assign it an AFA rate, or calculate a neutral facts

available rate for TMI . . . .” Id. at *9.

                On remand, Commerce found that “TMI failed to cooperate to the best of its

ability,” Remand Results at 24, because it “significantly impeded the review and provided

information that could not be verified,” id. at 4. Based on this determination, Commerce stated

that it would “continue[] to assign, as AFA, the rate of 111.73 percent for TMI . . . .” Id. at 24.

TMI now claims that this finding is contrary to law and not supported by substantial evidence.

Pl.’s Cmts. on the Results of Redetermination Pursuant to Court Remand (“Pl.’s Cmts.”) 10. In

addition, TMI continues to challenge the legality of the 111.73% AFA rate. See id. at 23.1

                       JURISDICTION AND STANDARD OF REVIEW

                The court has jurisdiction pursuant to 28 U.S.C. § 1581(c). The court will uphold

Commerce’s final results, as well as its remand results, in AD reviews unless they are

“unsupported by substantial evidence on the record, or otherwise not in accordance with

law . . . .” 19 U.S.C. § 1516a(b)(1)(B)(i).

                                             DISCUSSION

I.      Failure to Cooperate

                TMI claims that Commerce’s finding that it failed to cooperate by not acting to

the best of its ability is contrary to law and not supported by substantial evidence. See Pl.’s

Cmts. 10–23. Specifically, TMI argues that Commerce failed to establish with evidence that it



        1
         The intervenor defendant US Magnesium LLC asks the court to sustain the Remand
Results. See US Magnesium’s Cmts. Concerning Commerce’s Redetermination Pursuant to
Remand 5.
Court No. 09-00535                                                                               Page 5


had access to, and thus, could verify, information from its unaffiliated supplier. See id. at 13.

This claim lacks merit.

                During an AD review, when “an interested party has failed to cooperate by not

acting to the best of its ability to comply with a request for information from the administering

authority . . . the administering authority . . . may use an inference that is adverse to the interests

of that party in selecting from among the facts otherwise available.” 19 U.S.C. § 1677e(b).

Although the case law “does not require perfection and recognizes that mistakes sometimes

occur, it does not condone inattentiveness, carelessness, or inadequate record keeping.” Nippon

Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003); see Tianjin Magnesium Int’l,

2011 Ct. Int’l Trade LEXIS 16, at *10 n.6. Moreover, under 19 C.F.R. § 351.303(g)(1),

“Commerce’s regulations require a representative of the company participating in an

administrative review or investigation to certify that he has read the attached submission, and that

to the best of his knowledge, the information contained in the submission is complete and

accurate.” PAM, S.p.A. v. United States, 31 CIT 1008, 1018, 495 F. Supp. 2d 1360, 1369

(2007).

                On remand, Commerce determined that TMI failed to cooperate to the best of its

ability because it continued to purport the accuracy of certain favorable valuations, despite the

existence of discoverable falsifications in its producers’ supporting documentation.2 See


          2
         Even assuming, for arguments sake, that TMI did not have the resources to completely
verify the accuracy of its producer’s documentation, the court notes that Commerce did not place
TMI in this situation. See Pl.’s Cmts. 13–16. Rather, TMI claimed certain by-product offsets to
its normal value, rendering the verification of this supposed unobtainable information necessary.
See Remand Results at 7. Furthermore, at no time did TMI notify Commerce of any of the
                                                                                     (continued...)
Court No. 09-00535                                                                             Page 6


Remand Results, at 15–16. The record evidence shows that during its review, Commerce

attempted to verify the by-product offset claimed by TMI by examining the records of its

unaffiliated producers. See Issues and Decision Memorandum at 6. Commerce, however,

encountered multiple documents that were obviously altered. Id. at 6. Specifically, Commerce

discovered that certain vouchers had been pasted into accounting books. Id. In addition, the

producers repeatedly thwarted Commerce’s requests for information by, inter alia, throwing

voucher books out of office windows. Id. at 7. Commerce concluded that TMI possessed the

ability to discover these inaccuracies because the evidence suggests that it had access to the

unaffiliated producers’ production records and other ledgers, and had its officials and attorney

actively assist Commerce on behalf of the producers during verification. See Remand Results at

5–6, 9, 12–13. Commerce’s application of AFA, therefore, is adequately supported because TMI

failed to perform the tasks required of it by the AD law, or to timely seek direction from

Commerce. See Nippon Steel Corp., 337 F.3d at 1382 (stating that a respondent must “have

familiarity with all of the records it maintains . . . and conduct prompt, careful, and

comprehensive investigations of all relevant records . . . .”); Pac. Giant, Inc. v. United States, 26

CIT 1331, 1332–33 (2002) (providing that a respondent must alert Commerce to any discovered

problems).

               Commerce’s finding that TMI failed to cooperate by not acting to the best of its

ability, therefore, is supported by substantial evidence. Accordingly, Commerce’s Remand



       2
         (...continued)
difficulties it now claims. See Wuhan Bee Healthy Co. v. United States, 31 CIT 1182, 1193
(2007).
Court No. 09-00535                                                                              Page 7


Results are sustained.

II.    Corroboration

               Next, TMI challenges the Final Results on the grounds that the selected AFA rate

of 111.73% violates 19 U.S.C. § 1677e(c) because it is not corroborated and is punitive. Pl.’s Br.

26; Pl.’s Cmts. 23. This claim lacks merit.

               When Commerce uses inferences that are adverse to the interests of an

uncooperative party, the AD duty rate3 will be an AFA rate and may be based on information

obtained from: “(1) the petition, (2) a final determination in the investigation under this subtitle,

(3) any previous review under [19 U.S.C. § 1675] . . . or determination under [19 U.S.C. §

1675b] . . ., or (4) any other information placed on the record.” 19 U.S.C. § 1677e(b). Although

“the possibility of a high AFA margin creates a powerful incentive to avoid dumping and to

cooperate in investigations, there is a limit to Commerce’s discretion.” PAM S.p.A. v. United

States, 582 F.3d 1336, 1340 (Fed. Cir. 2009). Pursuant to 19 U.S.C. § 1677e(c), “[w]hen the

administering authority . . . relies on secondary information rather than on information obtained

in the course of an investigation or review, the administering authority . . . shall, to the extent

practicable, corroborate that information from independent sources that are reasonably at their

disposal.” 19 U.S.C. § 1677e(c). Here, the AFA rate of 111.73% was a weighted-average


       3
          A dumping margin is the difference between the normal value (“NV”) of merchandise
and the price for sale in the United States. See 19 U.S.C. § 1673e(a)(1); 19 U.S.C. § 1677(35).
Unless nonmarket economy (“NME”) methodology is used, an NV is either the price of the
merchandise when sold for consumption in the exporting country or the price of the merchandise
when sold for consumption in a similar country. 19 U.S.C. § 1677b(a)(1). In an NME case, NV
is calculated using information from comparable surrogate market economies. 19 U.S.C.
§ 1677b(c)(1). An export price or constructed export price is the price that the merchandise is
sold for in the United States. 19 U.S.C. § 1677a(a)-(b).
Court No. 09-00535                                                                           Page 8


margin calculated for a cooperating respondent during the previous administrative review and

thus, is secondary information. See KYD Inc. v. United States, 607 F.3d 760, 765 (Fed. Cir.

2010) (“Secondary information includes [i]nformation derived from the petition that gave rise to

the investigation or review, the final determination concerning the subject merchandise, or any

previous review under [19 U.S.C. § 1675] concerning the subject merchandise.” (Alteration in

original) (Internal quotation marks omitted)). Commerce, therefore, must corroborate this rate by

showing that it used “reliable facts” that had “some grounding in commercial reality.” Gallant

Ocean (Thai.) Co. v. United States, 602 F.3d 1319, 1324 (Fed. Cir. 2010) (Internal quotation

marks omitted); see 19 U.S.C. § 1677e(c).

               In the Final Results, Commerce reasoned that 111.73% was reliable because it “is

a calculated rate from the most recently completed segment of the proceeding” and relevant

because the “rate has not been judicially invalidated and indicates that pure magnesium is

dumped in the United States at a rate of 111.73 percent.”4 Issues and Decision Memorandum at

13. Commerce explained that this rate was the best available information because TMI was the



       4
          TMI claims that this rate of 111.73% has been discredited and is now 95.93%. Pl.’s Br.
24. The rate from the prior review for the cooperating respondent at issue, however, remains
111.73% because a motion to amend the rate was denied and an appeal was not pursued. See
Tianjin Magnesium Int’l Co. v. United States, 722 F. Supp. 2d 1322, 1328 (CIT 2010). Thus we
cannot know if the final result of further litigation would have been an altered rate. Furthermore,
TMI notes that this rate is not accurate without putting forth specific information in this review
or before the court that would permit the court to find 95.93% is a more accurate AFA margin.
See Pl.’s Br. 24 n.2. Some inaccuracy is inherent in AFA rates, which are simply a proxy for
missing data. In the prior review, the China-wide AFA rate was also in the same general range.
See Pure Magnesium from the People’s Republic of China: Final Results of Antidumping Duty
Administrative Review, 73 Fed. Reg. 76,336, 76,337 (Dep’t Commerce Dec. 16, 2008). The
differences here are not so great that the court would overlook TMI’s lack of substantial briefing
in this regard.
Court No. 09-00535                                                                            Page 9


only respondent in the current review, and TMI’s information from previous reviews was

unreliable, as Commerce had granted similar by-product offsets in the past without verification.5

Id. at 13. The AFA rate assigned to TMI under these circumstances, therefore, is lawful because

it is equal to the only weighted-average rate calculated for a cooperating company in the prior

review.6 See Shanghai Taoen Int’l Trading Co. v. United States, 29 CIT 189, 197, 360 F. Supp.

2d 1339, 1346 (2005) (providing “that in cases in which the respondent fails to provide

Commerce with information necessary to calculate an accurate antidumping margin, it is within

Commerce’s discretion to presume that the highest prior margin reflects the current margins”

(internal quotation marks omitted)). Accordingly, the AFA rate of 111.73% assigned to TMI is



       5
          TMI argues that Commerce failed to corroborate this rate because it failed to tie this rate
to TMI’s actual sales. Pl.’s Br. 23. TMI also contends that Commerce ignored “a large body of
reliable information,” presumably TMI’s sale data from past reviews, “supporting the application
of a much lower margin.” Id. Commerce, however, “note[d] concern with using a prior margin
calculated after [Commerce] granted the by-product offsets requested by TMI,” the same by-
product offsets that were unverifiable in the current review. Issues and Decision Memorandum
at 13. Thus, TMI’s prior margins, as well as the sales data underlying those results, were
unreliable. See Qingdao Taifa Grp. Co. v. United States, Slip Op. 2011-83, 2011 Ct. Int’l Trade
LEXIS 81, at *13 (CIT July 12, 2011) (“Taifa IV”).
       6
          TMI contends that this rate is punitive, and aberrational, and therefore, contrary to law
because it is 177 times greater than the highest calculated rate for TMI from a previous review.
Pl.’s Br. 24. Although Commerce calculated AD margins of zero and 0.63% for TMI in prior
reviews, Pure Magnesium from the People’s Republic of China: Final Results of 2004-2005
Antidumping Duty Administrative Review, 71 Fed. Reg. 61,019, 61,020 (Dep’t Commerce Oct.
17, 2006); Pure Magnesium from the People’s Republic of China: Final Results of Antidumping
Duty Administrative Review, 73 Fed. Reg. at 76,337, Commerce also expressed skepticism of
the accuracy of those rates because it granted TMI the same by-product offsets that it could not
verify in this review, Issues and Decision Memorandum at 13. Some of the offsets do seem to be
unusually large. See Remand Results at 8–9. The seemingly large difference between TMI’s
previous AD margins and the assigned AFA rate in this review, therefore, is irrelevant due to the
fact that TMI’s previous AD margins cannot be said to reflect TMI’s commercial reality. See
Taifa IV, 2011 Ct. Int’l Trade LEXIS 81, at *13.
Court No. 09-00535                                                                      Page 10


corroborated to the extent practicable.

                                          CONCLUSION

               For the foregoing reasons, Commerce’s determinations are supported by

substantial evidence and are in accordance with the law. Accordingly, the Remand Results are

sustained.
                                                       /s/ Jane A. Restani
                                                           Jane A. Restani
                                                                Judge

Dated: This 10th day of August, 2011.
       New York, New York.
