                                     Slip Op. 12-156

                  UNITED STATES COURT OF INTERNATIONAL TRADE

MUELLER COMERCIAL DE MEXICO, S.
DE R.L. DE C.V., and SOUTHLAND PIPE
NIPPLES CO, INC.,
                                                  Before: Leo M. Gordon, Judge
                           Plaintiffs,
                                                  Court No. 11-00319
             v.
                                                  PUBLIC VERSION
UNITED STATES,

                           Defendant.

                                 OPINION and ORDER

[Plaintiffs’ motion for judgment on the agency record denied; final administrative review
results sustained.]

                                                             Dated: December 21, 2012

      David E. Bond, Yohai Baisburd, Jay C. Campbell, and Ting-Ting Kao, White &
Case LLP of Washington, DC, for Plaintiffs Mueller Comercial de Mexico, S. de R.L. de
C.V. and Southland Pipe Nipples Co., Inc.

       Douglas G. Edelschick, Trial Attorney, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, of Washington, DC, for Plaintiff United States.
With him on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne
E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel was Nathaniel
J. Havlorson, Department of Commerce, Office of the Chief Counsel for Import
Administration.

      Roger B. Schagrin and Michael J. Brown, Schagrin Associates of Washington,
DC, for Defendant-Intervenors TMK IPSCO Tubulars and Allied Tube and Conduit.

      Jeffrey D. Gerrish and Robert E. Lighthizer, Skadden Arps Slate Meagher &
Flom, LLP of Washington, DC, for Defendant-Intervenor United States Steel
Corporation.

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

U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering
Court No. 11-00319                                                                Page 2

certain circular welded non-alloy steel pipe from Mexico. See Certain Circular Welded

Non-Alloy Steel Pipe From Mexico, 76 Fed. Reg. 36,086 (Dep’t of Commerce June 21,

2011) (admin. review 2008-09 final results) (Final Results); see also Issues and

Decision Memorandum for Final Results of Antidumping Duty Administrative Review:

Certain Circular Welded Non-Alloy Steel Pipe from Mexico, A-201-805 (June 13, 2011),

available     at   http://ia.ita.doc.gov/frn/summary/mexico/2011-15461-1.pdf     (Decision

Memorandum), which incorporates by reference the Use of Adverse Facts Available

(AFA) for Final Results Memorandum (June 13, 2011) (AFA Memo), CD 661 (last visited

Dec. 21, 2012.)

         Before the court is the motion for judgment on the agency record of Plaintiffs

Mueller Comercial de Mexico, S. de R.L. de C.V., and Southland Pipe Nipples Company, Inc.

(collectively Mueller). The court previously stayed Mueller’s challenge to Commerce’s

use of zeroing pending a decision on that issue from the Federal Circuit. See Order,

Nov. 21, 2011, ECF No. 35. This opinion addresses Mueller’s remaining challenge to

Commerce’s use of facts available for missing production data from a non-cooperating

mandatory respondent that supplied Mueller. The court has jurisdiction pursuant to

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

§ 1516a(a)(2)(B)(iii) (2006),2 and 28 U.S.C. § 1581(c) (2006). For the reasons set forth

below, the court sustains Commerce’s use of facts available.


1
    “CD __” refers to Confidential Document.
2
 Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of
Title 19 of the U.S. Code, 2006 edition.
Court No. 11-00319                                                            Page 3

                                I. Standard of Review

      For administrative reviews of antidumping duty orders, the U.S. Court of

International Trade sustains Commerce‘s “determinations, findings, or conclusions”

unless they are “unsupported by substantial evidence on the record, or otherwise not in

accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). More specifically, when reviewing

agency determinations, findings, or conclusions for substantial evidence, the court

assesses whether the agency action is reasonable given the record as a whole. Nippon

Steel Corp. v. United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006). Substantial

evidence has been described as “such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion.” DuPont Teijin Films USA v. United States,

407 F.3d 1211, 1215 (Fed. Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S.

197, 229 (1938)). Substantial evidence has also been described as “something less

than the weight of the evidence, and the possibility of drawing two inconsistent

conclusions from the evidence does not prevent an administrative agency's finding from

being supported by substantial evidence.” Consolo v. Fed. Mar. Comm'n, 383 U.S. 607,

620 (1966). Fundamentally, though, “substantial evidence” is best understood as a

word formula connoting reasonableness review. 3 Charles H. Koch, Jr., Administrative

Law and Practice § 9.24[1] (3d. ed. 2012). Therefore, when addressing a substantial

evidence issue raised by a party, the court analyzes whether the challenged agency

action “was reasonable given the circumstances presented by the whole record.”

Edward D. Re, Bernard J. Babb, and Susan M. Koplin, 8 West's Fed. Forms, National

Courts § 13342 (2d ed. 2012).
Court No. 11-00319                                                                 Page 4

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

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

Commerce's interpretation of the antidumping statute. See United States v. Eurodif

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

unambiguous statutory language to the contrary or unreasonable resolution of language

that is ambiguous.”).

                                     II. Background

       At the start of the administrative review, Commerce selected three mandatory

respondents, (1) Mueller, an exporter, who sourced subject merchandise from

producers, (2) Tuberia Nacional, S.A. de C.V. (“TUNA”), and (3) Ternium Mexico, S.A.

de C.V. (“Ternium”).    Certain Circular Welded Non-Alloy Steel Pipe from Mexico, 75

Fed. Reg. 78,216 at 78,216, (Dep’t of Commerce Dec. 15, 2010) (admin. review 2008-

09 prelim. results) (“Preliminary Results”).    Mueller fully cooperated.    As a reseller,

though, Mueller did not possess all of the cost information Commerce required to

calculate Mueller’s margin. Decision Memorandum at 13. Commerce requested the

cost information directly from Mueller’s two principal unaffiliated suppliers (and the two

other mandatory respondents), TUNA and Ternium. Preliminary Results at 78,219-20;

see also SKF USA Inc. v. United States, 630 F.3d 1365, 1371, 1375-76 (Fed. Cir. 2011)

(“SKF”) (“On the face of these provisions, Commerce can utilize unaffiliated suppliers’

records for cost of production data in lieu of the exporter’s acquisition cost.”), on remand

to, SKF USA Inc. v. United States, 35 CIT ___, 2011 WL 4889070 (Oct. 14, 2011),

opinion after remand, SKF USA Inc. v. United States, 36 CIT ___, 2012 WL
Court No. 11-00319                                                            Page 5

2929404 (July 18, 2012). Although TUNA’s review was rescinded (due to no direct

shipments), and Ternium opted not to participate in its own margin calculation, TUNA

and Ternium did respond separately to Commerce’s request for cost of production

(COP) data for sales made to Mueller. Commerce sought this information to evaluate

(1) whether Mueller’s home market sales were made below the cost of production, and

(2) to calculate a constructed value for comparison to Mueller’s United States prices

when a price-to-price comparison was not possible. Preliminary Results at 78,219-20;

see also 19 U.S.C. § 1677b(b)(3); 19 U.S.C. § 1677b(e).

      TUNA fully cooperated with these COP data requests, reporting cost of

production on a product-specific basis. Ternium, however, did not cooperate to the

same extent. Ternium failed to “‘provide detailed product-specific calculations that

allocate costs based on product dimensions.’”    AFA Memo at 2 (quoting Ternium’s

December 21, 2010, section D questionnaire response at 3). After determining Ternium

had not cooperated to the best of its ability, Commerce applied adverse facts available

(AFA) for Ternium’s “cost of production for the specific products sold by Ternium to

Mueller.” AFA Memo at 5.3 More specifically, Commerce analyzed TUNA’s sales to

Mueller and the corresponding costs of production, and identified as AFA the sale

between TUNA and Mueller made at the greatest percentage below the cost of

production. Id. at 4-5. Commerce then evaluated whether that potential AFA rate was

an outlier or aberrational, and concluded it was not. Id. at 5. Commerce also compared


3
 Commerce also assigned Ternium a total adverse facts available (AFA) rate of 48.33%
for Ternium’s overall failure to participate in the review. AFA Memo at 1.
Court No. 11-00319                                                               Page 6

that potential AFA rate with other TUNA-Mueller sales/cost differentials and found them

to be “insufficiently adverse to compel Ternium to cooperate.” Id.

          Having identified what it believed to be an appropriate AFA rate for Ternium’s

CONNUM-specific production costs, Commerce returned to Mueller’s margin calculation

and multiplied the AFA rate by Mueller’s acquisition costs for each of Ternium’s

products. Id.; Decision Memorandum at 13-21. Throughout the process Commerce

carefully, if not cleverly, avoided drawing an adverse inference directly against Mueller,

a cooperating party. Id. at 12-13. Commerce repeatedly made clear that it was drawing

an adverse inference against Ternium, not Mueller. Mueller, nevertheless, suffered

adverse collateral consequences from Commerce’s use of Ternium’s AFA rate in

Mueller’s margin calculation, which increased from 4.81 percent in the preliminary

results to 19.81 percent in the final.

          Mueller challenges Commerce’s selection of facts available for Mueller’s

production costs that include an AFA rate for Ternium’s production costs. See Mem. in

Supp. of Pls.’ R. 56.2 Mot. for J. on Agency R. (“Pls.’ Br.”), ECF No. 38-2. Mueller

argues that Commerce unreasonably applied the antidumping statute, violating the

court’s decision in SKF USA, Inc. v. United States, 33 CIT ___, ___, 675 F. Supp. 2d

1264, 1276 (2009) (“SKF USA”). Id. at 3-11 (Commerce’s “actions and interpretation of

the antidumping statute are clearly impermissible under this Court’s ruling in SKF USA,

Inc.”).    Mueller also argues in the alternative that the facts available applied by

Commerce are unreasonable on this administrative record (unsupported by substantial

evidence). Id. at 13-17.
Court No. 11-00319                                                             Page 7

                                         III. Discussion

          A. Commerce’s Application of 19 U.S.C. § 1677e is Reasonable

      This case involves 19 U.S.C. § 1677e, which governs Commerce’s use of “facts

available.” Section 1677e directs Commerce to use the facts otherwise available if

necessary information is not available on the administrative record.         19 U.S.C.

§ 1677e(a). Necessary information may not be available if, among other things, an

interested party withholds information that has been requested, or fails to provide

information in the form and manner requested. 19 U.S.C. § 1677e(a)(2). For Mueller’s

margin calculation TUNA’s production costs were available in the form and manner

requested, but Ternium’s were not.        Ternium’s missing data implicated 1677e(a)

because Ternium, an interested party and mandatory respondent, failed to provide

requested information in the form and manner requested. Ternium’s lack of cooperation

also implicated section 1677e(b), which permits Commerce to draw adverse inferences

when selecting from among the facts available to fill an information gap. The question

here is whether section 1677e also allows Commerce to factor in AFA against a non-

cooperative supplier when selecting from among the facts otherwise available to

calculate a cooperating exporter’s production costs. Or stated another way, does the

antidumping statute require Commerce to ignore the adverse inference against Ternium

when filling the information gap for Mueller’s costs of production?

      Mueller and Defendant agree that the statute “is silent” for purposes of the

Chevron two-step framework. Pls.’ Br. at 4. Defendant-Intervenor United States Steel

Corporation argues that Commerce’s action is, in fact, mandated under the first prong of
Court No. 11-00319                                                              Page 8

Chevron. United States Steel Corp.’s Mem. in Opp’n to Pls.’ Mot. for J. on the Agency R.

at 3-5, ECF No. 50.     The court, however, agrees with Mueller and Defendant that

Congress did not specifically provide the manner in which Commerce should evaluate

the costs of a cooperating exporter sourcing product from a non-cooperating producer.

      Under the second prong of Chevron, Commerce’s “interpretation governs” as

long as it is reasonable. United States v. Eurodif S.A., 555 U.S. 305, 316 (2009); accord

Timken Co. v. United States, 354 F.3d 1334, 1342 (Fed. Cir. 2004) (“[a]ny reasonable

construction of the statute is a permissible construction”).     To determine whether

Commerce's interpretation is reasonable, the court “may look to ‘the express terms of

the provisions at issue, the objectives of those provisions, and the objectives of the

antidumping scheme as a whole.’” Wheatland Tube Co. v. United States, 495 F.3d 1355,

1361 (Fed. Cir. 2007) (quoting NSK Ltd. v. United States, 26 CIT 650, 654, 217 F. Supp.

2d 1291, 1296-97 (2002)).

      Commerce interpreted Section 1677e as “manifesting an intent by Congress to

provide the agency with authority to seek such information” and “a mechanism to induce

compliance if the interested party’s failure to cooperate might affect the dumping margin

of another party.” Decision Memorandum at 18; see also Essar Steel Ltd. v. United

States, 678 F.3d 1268, 1276 (Fed. Cir. 2012) (“Without the ability to enforce full

compliance with its questions, Commerce runs the risk of gamesmanship and lack of

finality in its investigations.”). Commerce explained that it “does not have subpoena

power,” and “the use of [AFA] is the only recourse available to the agency to ensure that

interested parties provide it with full and complete information.” Decision Memorandum
Court No. 11-00319                                                               Page 9

at 18; see also Essar Steel, 678 F.3d at 1276 (“Because Commerce lacks subpoena

power, Commerce’s ability to apply adverse facts is an important one.”). Commerce

elaborated that its “ability to use facts available provides the only incentive for an

interested party to cooperate.” Decision Memorandum at 18; see also Essar Steel, 678

F.3d at 1276 (“The purpose of the adverse facts statute is ‘to provide respondents with

an incentive to cooperate’ with Commerce’s investigation”) (quoting F.lli De Cecco Di

Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000)).

Commerce further explained that it “has a duty to both ensure that uncooperative

parties do not benefit from their lack of cooperation and to encourage their future

compliance.” Decision Memorandum at 18. Commerce concluded that the statute does

not require it to ignore Ternium’s non-cooperation when selecting from facts available to

fill the information gap for Mueller. Id.

       Commerce also considered the potential effect that its statutory interpretation

would have upon cooperative respondents such as Mueller. Cf. SKF, 630 F.3d at 1374-

75 & n.6 (Commerce’s “[u]se of adverse inferences may be unfair considering SKF has

no control over its unaffiliated supplier’s actions,” and “Commerce must explain why”

this “concern is unwarranted or is outweighed by other considerations.”). Commerce

reiterated that it did “not attempt to penalize Mueller,” but rather, it sought “to induce

compliance and to ensure that Ternium [did] not benefit from its non-compliance.”

Decision Memorandum at 18-19. Commerce recognized that, as “a general matter,

companies that choose to do business with uncooperative parties may also be

impacted.” Decision Memorandum at 19. Commerce reasoned that, if it “were unable
Court No. 11-00319                                                                 Page 10

to apply [AFA] to Ternium’s exports through Mueller, Ternium would benefit from its

failure to cooperate with” Commerce’s “requests for information.”        Id.    Specifically,

Commerce explained that, “if we were to accept Mueller’s arguments, the subject

merchandise produced and exported by Ternium would be subject to a total [AFA] rate

of 48.33” percent, “while the Ternium-produced merchandise exported by Mueller would

be subject to the much lower weighted-average rate of Mueller, such as the rate of 4.81

[percent] from the Preliminary Results.” Id. at 19-20. Commerce expressed concern

that under Mueller’s interpretation of the statute, “Ternium could continue to produce

and sell the subject merchandise for prices less than its normal value to the U.S. market,

by directing it[s] merchandise through Mueller, where it would have no obligation to ever

provide cost of production information.” Id. at 20.

       Commerce further considered its duty to determine Mueller’s margin accurately

and concluded that its decision advances this interest. From a practical standpoint,

without the required Ternium COP data, there is no way to know whether Mueller’s

home market sales of Ternium products are above or below cost, and whether they may

properly be used as a basis for normal value. It is therefore difficult for Commerce, the

parties, or the court to know with certainty what a truly “accurate” margin for Mueller is.

Commerce explained: “Although premised on the adverse inference that Ternium’s

actual cost information would not be favorable—otherwise Ternium may not have

elected to withhold it from the Department—the selected facts available are intended to

produce an accurate, non-punitive, dumping margin for Mueller.”           Id.   Commerce

reasoned that if it “ignores the fact that Ternium chose to withhold necessary
Court No. 11-00319                                                                 Page 11

information and fails to apply an adverse inference in the selection of facts available, the

resulting dumping margin would not reflect accurately the rate at which Mueller’s sales

of merchandise produced by Ternium was sold at less than normal value.”                  Id.

Commerce concluded that the “[a]pplication of an adverse inference only to the missing

cost of production information that Ternium has withheld is a reasonable and limited

inference based on the information on the record that ensures Ternium does not benefit

from its failure to cooperate and also avoids an inaccurate dumping margin for Mueller.”

Id.

       Mueller, for its part, argues that it fully cooperated during the review and that

Commerce should therefore ignore Ternium’s non-cooperation to be fair when

calculating Mueller’s dumping margin. Pls.’ Br. at 5 (quoting SKF USA, 33 CIT at ___,

675 F. Supp. 2d at 1275).

       Mueller relies heavily upon the decision in SKF USA, arguing that Commerce’s

decision violates that precedent. Pls.’ Br. at 1-10. In SKF USA, Commerce interpreted

Section 1677e as authorizing Commerce to draw an adverse inference against a

cooperative exporter, SKF, based solely upon non-cooperation by SKF’s unaffiliated

supplier. SKF USA, 33 CIT at ___, 675 F. Supp. 2d at 1274-75.                 Notably, the

“unaffiliated supplier was not a party to the administrative reviews proceeding and,

therefore, was not in a position to be assigned a margin reflecting an adverse inference.”

Id. at 1275. Instead, Commerce imposed an AFA rate of 17.33 percent directly upon

the otherwise cooperative reseller, SKF, for purposes of all sales from the non-

cooperative supplier during the review. Id. at 1267, 1275. Commerce selected 17.33
Court No. 11-00319                                                                  Page 12

percent because it was adverse to SKF, representing the highest dumping margin ever

calculated for SKF in any segment of the proceeding, from approximately 15 years

earlier during the third administrative review.       Id. at 1275.    The court held that

Commerce’s interpretation of Section 1677e was unreasonable under the second prong

of Chevron, was “not fair” to the cooperating respondent, and violated Commerce’s duty

to determine margins “accurately and according to the relevant information on the

record of the administrative review.” Id. The court noted:

       Allowing an interested party's failure to cooperate to affect adversely the
       dumping margin of another interested party who is a party to the
       proceeding, about whom Commerce did not make a finding of non-
       cooperation, violates the Department's obligation to treat fairly every
       participant in an administrative proceeding. As is any government agency,
       Commerce is under a duty to accord fairness to the parties that appear
       before it. Although 19 U.S.C. § 1677e(b) does not expressly state that
       Commerce may not adversely affect a party to a proceeding based upon
       another interested party's failure to cooperate, a construction permitting
       such an absurd result makes a mockery of any notion of fairness. In the
       specific context of the antidumping laws, a party that did not fail to meet its
       obligation to cooperate, as imposed by § 1677e(b), is entitled by § 1675(a)
       and related provisions of the antidumping law to have its margin
       determined accurately and according to the relevant information on the
       record of the administrative review. See 19 U.S.C. § 1675(a)(1)-(2)
       (requiring generally that Commerce determine the amount of antidumping
       duty according to normal value and export price or constructed export
       price of each entry of subject merchandise); Rhone Poulenc, Inc. v. United
       States, 899 F.2d 1185, 1191 (Fed. Cir. 1990)(stating that “the basic
       purpose of the [antidumping] statute [is] determining current margins as
       accurately as possible”).

Id. at 1276.

       In this case Commerce took a decidedly different approach. Commerce did not

draw an adverse inference against Mueller, did not rely upon a dumping rate previously

calculated for Mueller, or select a rate because it was adverse to Mueller. Rather,
Court No. 11-00319                                                               Page 13

Commerce selected a ratio based on some of TUNA’s cost data as the best available

information in place of Ternium’s missing cost data. Id. When Commerce made the

judgment as to what information available on the record was best to evaluate Mueller’s

cost of production for Ternium products, Commerce considered the adverse inference

that it had drawn against Ternium—a mandatory respondent to whom Commerce had

assigned a margin reflecting an adverse inference. Id. Unlike SKF USA, this case

involves a different interpretation of Section 1677e by Commerce, a different

methodology for selecting from the facts available, and a different record. Therefore,

Mueller’s argument that the facts in SKF USA are “virtually identical to the facts in this

case” is not correct. As opposed to Commerce’s “unreasonable” decision-making in

SKF USA, Commerce’s decision-making here appears thorough, thoughtful, logical, and

complete.

      Commerce carefully considered the remedial statutory scheme, the intent of

Congress, the potential unfairness to Mueller, and the impact of its decision on the

accuracy of Mueller’s dumping margin. Decision Memorandum at 16-20.             Using its

administrative expertise, Commerce reasonably concluded that all of these factors

support the agency’s interpretation of the antidumping statute that Congress has

charged it to administer.   Id.   Commerce determined, consistent with the remedial

purposes of the antidumping law, the statutory policy of encouraging interested parties

to cooperate with information requests, and the obligation to calculate dumping margins

as accurately as possible, that Section 1677e authorizes Commerce, in place of missing

cost data needed to determine a cooperating exporter’s dumping margin, to consider an
Court No. 11-00319                                                             Page 14

adverse inference against a non-cooperative supplier when selecting from facts

otherwise available on the record. In the court’s view, that determination is reasonable

and entitled to Chevron deference. It therefore “governs.” See Eurodif, 555 U.S. at 316,

Timken, 354 F.3d at 1342.

         B. Commerce Selection from Among Facts Available is Reasonable

         Mueller also argues in the alternative that the facts available applied by

Commerce are unreasonable on this administrative record (unsupported by substantial

evidence). Pls.’s Br. at 13-17. This argument though is largely predicated on Mueller’s

argument that Commerce may not consider the adverse inferences drawn against

Ternium when choosing from among the facts available to use for Mueller’s production

costs.    As explained above, the facts available on the administrative record for

Ternium’s production costs for sales made to Mueller included the AFA rate that

Commerce determined for Ternium’s costs of production, which Commerce derived

from TUNA’s production cost data and Mueller’s acquisition cost data. AFA Memo at 4.

         Commerce compared “TUNA’s sales to Mueller and TUNA’s cost of production

information for specific products.” Commerce was “able to perform a cost test on

TUNA’s sales to Mueller,” and Commerce selected “the sales transaction between

TUNA and Mueller made . . . at the greatest percentage below the cost of production.”

AFA Memo at 4. This “was the same as the next two transactions with a differential

between the sale price and the cost of production.” Id. at 5. Commerce determined that

a ratio based on TUNA’s production costs for these transactions was most probative of

Ternium’s withheld cost data. Decision Memorandum at 16, 20 (Commerce “has
Court No. 11-00319                                                                Page 15

selected from the facts otherwise available, the best information to use in place of

Temium’s withheld cost data”); AFA Memo at 5 (Commerce selected the “most

probative evidence” available). There is no dispute that, like Ternium, TUNA produced

the same types of products in the same country and then sold them to the same

exporter (Mueller) during the same period of review.

      Mueller, nevertheless, argues that production costs for the TUNA transactions

that Commerce selected are not probative of all TUNA transactions, Pls.’ Br. at 11-12,

14-16, but Defendant correctly explains that this misses the point. Commerce selected

a ratio based on some of the TUNA transactions because the production costs

associated with them (and the accompanying [           ] percent differential with Mueller’s

acquisition price) were, according to Commerce, the best information to use in place of

Ternium’s missing cost data.     Decision Memorandum at 16, 20; AFA Memo at 5.

Commerce reasonably declined to rely upon TUNA’s cost data for the balance of

TUNA’s products, which had a differential of less than [              ] percent, because

Commerce determined that they were “insufficiently adverse” to induce Ternium’s

cooperation. AFA Memo at 5. Commerce explained that it had assigned Ternium a

total AFA rate (48.33%) during the prior review, and this had not induced Ternium to

cooperate during the current review, leading Commerce to draw an adverse inference

that Ternium refused to cooperate because its data would have been less favorable.

AFA Memo at 5 (citing Certain Circular Welded Non-Alloy Steel Pipe From Mexico, 75

Fed. Reg. 20342, 20343 (Dep’t of Commerce Apr. 19, 2010) (admin. review 2007-08

final results)); Decision Memorandum at 15-16, 18, 20 (discussing inference against
Court No. 11-00319                                                                  Page 16

Ternium).

       Mueller also argues that its acquisition costs are “certainly more probative of the

issue,” Pls.’ Br. at 11-12, but Commerce reasonably concluded otherwise using its

administrative expertise.   Preliminary Results at 78,219-20.      Congress requires that

Commerce determine the costs associated with Mueller’s sales of Ternium products by

calculating “an amount equal to the cost of materials and fabrication or other processing

of any kind employed in producing the merchandise,” plus profit and selling, general,

and administrative expenses. See 19 U.S.C. § 1677b(e). There is no dispute that

Mueller does not possess all of this information because it resells rather than produces

the merchandise at issue. Decision Memorandum at 13. Commerce also determined

that Mueller’s acquisition costs for products from its supplier, TUNA, did not equate to

the costs of production reported by TUNA for those products.           AFA Memo at 4-6.

Commerce reasonably concluded that supplier production costs are more probative

than exporter acquisition costs. Decision Memorandum at 13; see also SKF, 630 F.3d

at 1371, 1375-76 (“On the face of these provisions, Commerce can utilize unaffiliated

suppliers’ records for cost of production data in lieu of the exporter’s acquisition cost.”),

on remand to, SKF USA Inc. v. United States, 35 CIT ___, 2011 WL 4889070 (Oct. 14,

2011), opinion after remand, SKF USA Inc. v. United States, 36 CIT ___, 2012 WL

2929404 (July 18, 2012)).

       Finally, Mueller suggests that Commerce could have relied upon Ternium’s data.

Pls.’ Br. at 13-14. Ternium supplied average cost of production data relative to four of

its “product families” during the administrative review, but Ternium failed to provide data
Court No. 11-00319                                                                   Page 17

as Commerce requested on a specific, product-by-product basis. AFA Memo at 3.

Commerce did not use average cost data for Ternium’s “product families” due to

accuracy concerns.      Decision Memorandum at 16-17.            Commerce explained that

Ternium’s average cost data limited to four product categories did not “reflect cost

differences attributable to the different physical characteristics” of the several dozen

products reviewed.      Id. at 17.    Therefore, Commerce reasonably concluded that

Ternium’s overall cost data was not the most probative facts available in place of

Ternium’s missing product-specific cost data.

                                      IV. Conclusion

       For the foregoing reasons, Commerce’s application of facts available to calculate

Mueller’s costs of production is sustained. Accordingly, it is hereby

       ORDERED that the Final Results are sustained with respect to Commerce's

application of facts available to calculate Mueller’s costs of production; and it is further

       ORDERED that Mueller’s challenge to Commerce’s practice of zeroing remains

stayed pending a decision on the issue from the U.S. Court of Appeal for the Federal

Circuit.



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


Dated: December 21, 2012
       New York, New York
