                                      Slip Op. 14-43

                UNITED STATES COURT OF INTERNATIONAL TRADE


  HUBSCHER RIBBON CORP., LTD.,

                       Plaintiff,
                                                       Before: Leo M. Gordon, Judge
         v.
                                                       Court No. 13-00071
  UNITED STATES,
                                                       PUBLIC VERSION
                      Defendant.


                                         OPINION

[Final results of administrative review sustained.]

                                                                      Dated: April 15, 2014

      John J. Kenkel, Gregory S. Menegaz, and J. Kevin Horgan, deKieffer & Horgan,
of Washington, DC, for Plaintiff Hubscher Ribbon Corp., Ltd.

      Ryan M. Majerus, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, DC, for Defendant United States. With him on the briefs
were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M.
McCarthy, Assistant Director. Of counsel on the briefs was Scott D. McBride, Senior Attorney,
U.S. Department of Commerce, Office of the Chief Counsel for Import Administration, of
Washington, DC.

       Gregory C. Dorris, Pepper Hamilton, LLP, of Washington, DC, for Defendant-
Intervenor Berwick Offray, LLC.

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

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

narrow woven ribbons with woven selvedge from the People’s Republic of China. See

Narrow Woven Ribbons with Woven Selvedge from the People’s Republic of China,

78 Fed. Reg. 10,130 (Dep’t of Commerce Feb. 13, 2013) (final results admin. review)

(“Final Results”); see also Issues and Decision Memorandum for the Final Results of the
Court No. 13-00071                                                                  Page 2

Antidumping Duty Administrative Review on Narrow Woven Ribbons with Woven

Selvedge from the People’s Republic of China, A-570-952 (Dep’t of Commerce Feb. 5,

2013)    (“Decision   Memorandum”),      available   at   http://enforcement.trade.gov/frn/

summary/prc/2013-03236-1.pdf (last visited this date).       Before the court is Plaintiff

Hubscher Ribbon Corp., Ltd.’s (“Hubscher”) motion for judgment on the agency record

challenging Commerce’s assignment of a total adverse facts available (“AFA”) rate of

247.65%. See Pl.’s R. 56.2 Mem. in Supp. of Mot. for J. on the Agency R. at 3, ECF

No. 33 (“Pl.’s Br.”). The court has jurisdiction pursuant to Section 516A(a)(2)(B)(iii) of

Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(2)(B)(iii) (2006),1 and 28 U.S.C.

§ 1581(c) (2006). For the reasons set forth below, the court sustains the Final Results.

                                      I. Background

        During the less than fair value (“LTFV”) investigation, Commerce assigned

dumping margins of 0.00% to Yama Ribbons and Bows Co., Ltd. (“Yama”), the sole

cooperative mandatory respondent, 123.83% for the separate rate respondents, and

247.65% as total adverse facts available (“AFA”) for (1) the China-wide entity and (2) the

uncooperative mandatory respondent Ningbo Jintian Import & Export Co., Ltd. (“Ningbo”).

Narrow Woven Ribbons with Woven Selvedge from the People’s Republic of China,

75 Fed. Reg. 41,808, 41,811 (Dep’t of Commerce July 19, 2010) (final determ.) (“LTFV

Final Results”).




1
  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, and all applicable supplements.
Court No. 13-00071                                                                    Page 3

       The separate rate of 123.83% was the subject of interesting litigation. One of the

separate rate respondents, Yangzhou Bestpak Gifts & Crafts Co. (“Bestpak”), challenged

the reasonableness of the 123.83% separate rate, which Commerce derived by simply

averaging Yama’s de minimis rate and Ningbo’s total AFA rate (which was derived from

the petition). The U.S. Court of International Trade (“CIT”) was initially skeptical that such

a simple average constituted a “reasonable method” to derive the separate rate,

assuming there might be other options from the administrative record, and remanded to

Commerce for further consideration. Yangzhou Bestpak Gifts & Crafts Co. v. United

States, 35 CIT ___, ___, 783 F. Supp. 2d 1346, 1350-53 (2011), after remand, 36 CIT

___, 825 F. Supp. 2d 1346 (2012), vacated by 716 F.3d 1370 (Fed. Cir. 2013).

On remand, Commerce explained that there was very limited data upon which to

determine the commercial reality of the separate rate respondents. Bestpak, 36 CIT at

___, 825 F. Supp. 2d at 1350-51. The CIT acknowledged the limited record data and

sustained Commerce’s explanation as reasonable (supported by substantial evidence),

albeit reluctantly. It explained the challenges that limited data pose for Commerce, the

interested parties, and the court, especially when drawing conclusions about what

constitutes a reasonable measure for the separate rate. Id. 36 CIT at ___, 825 F. Supp.

2d at 1350-53.

       On appeal the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”)

rejected the reasonableness of Commerce’s simple average that incorporated a total AFA

rate for otherwise cooperative, separate rate respondents, noting that Commerce was to

blame for the limited record, having had ample time to select another mandatory
Court No. 13-00071                                                                   Page 4

respondent when Ningbo withdrew its participation. Bestpak, 716 F.3d at 1378-80. On

remand Commerce chose to review Bestpak individually and calculate its actual rate.

Despite Bestpak maintaining through the course of the litigation that it deserved a zero

percent rate, Bestpak, 35 CIT at ___, 825 F. Supp. 2d at 1350 (“Bestpak, for its part,

requests an order from the court directing Commerce to assign Bestpak a 0% rate.”),

716 F.3d at 1381-82 (“Bestpak . . . argued that the sample invoice was evidence of its

commercial behavior and strongly supported a determination that Bestpak was entitled to

a zero dumping rate.”), Bestpak voluntarily dismissed the litigation rather than be

individually reviewed, conceding that all its entries would be covered by the 123.83%

separate rate. See Form 8 Notice of Dismissal, Yangzhou Bestpak Gifts & Crafts Co. v.

United States, No. 10-00295 (USCIT Nov. 13, 2013), ECF No. 76 (“Yangzhou Bestpak

will remain subject to the antidumping duty order on narrow woven ribbon with woven

selvedge from the People’s Republic of China at the antidumping duty rate of 123.83%,

and all of Bestpak’s entries suspended in this action will be liquidated at that rate.”). One

wonders what Bestpak’s actual rate and commercial reality would have been had

Commerce completed the individual review. Would it have been higher than 123.83%?

In any event, although seemingly struck down by the Federal Circuit as unreasonable,

the 123.83% separate rate now appears to have regained some validity.

       In the subsequent first administrative review Commerce selected and examined

Hubscher, an exporter, as the only mandatory respondent. No other respondents were

individually reviewed. Narrow Woven Ribbons with Woven Selvedge from the People’s

Republic of China, 77 Fed. Reg. 47,363, 47,363-64 (Dep’t of Commerce Aug. 8, 2012)
Court No. 13-00071                                                                  Page 5

(prelim. results admin. review) (“Preliminary Results”). Hubscher at first cooperated,

reporting among its questionnaire responses that Yama produced all of the subject

merchandise that Hubscher imported during the period of review. When it came time to

submit its cost information, however, Hubscher withdrew from the administrative review.

Hubscher Letter Re: Withdrawal from Administrative Review, at 1-2 (Dep’t of Commerce

May 29, 2012), PD 68.2

       Commerce then applied total AFA to Hubscher. Preliminary Results, 77 Fed. Reg.

at 47,367; Decision Memorandum at 2. Commerce selected 247.65%, “the highest rate

alleged in the petition,” as the total AFA rate. Preliminary Results, 77 Fed. Reg. at 47,368

(“To determine the relevance of the petition margin, we placed the model-specific rates

calculated for the respondents in the LTFV investigation on the record of this segment of

the proceeding and compared the 247.65 percent rate with those model-specific rates.”);

see also Final Results, 78 Fed. Reg. at 10,133; Decision Memorandum at 8-10 & n.26;

Comments and Departmental Position Containing Proprietary Information (Dep’t of

Commerce Feb. 5, 2013), CD 30 (“Corroboration Memorandum”). Although Hubscher

admits “that it did not fully participate in the first administrative review and deserves a

dumping margin based on ‘adverse facts available,’” Pl.’s Br. at 17; see 19 U.S.C.

§ 1677e(a), Hubscher argues that Commerce unreasonably applied the highest petition

rate as total AFA. Pl.’s Br. at 3, 17. For the reasons set forth below, the court sustains

the Final Results.




2
  “PD” refers to a document contained in the public administrative record. “CD” refers to
a document contained in the confidential record.
Court No. 13-00071                                                               Page 6

                                II. Standard of Review

      For administrative reviews of antidumping duty orders, the court sustains

Commerce‘s “determinations, findings, or conclusions” unless they are “unsupported by

substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C.

§ 1516a(b)(1)(B)(i). More specifically, when reviewing agency determinations, findings,

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

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

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

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

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. 2014).

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. 2013).

      Separately, the two-step framework provided in Chevron, U.S.A., Inc. v. Natural
Court No. 13-00071                                                                  Page 7

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.”).

                                      III. Discussion

       In a total AFA scenario like the one presented here, Commerce typically cannot

calculate an antidumping rate for an uncooperative respondent because the information

required for such a calculation (in this case the respondent's cost information for the

subject merchandise during the period of review) has not been provided. As a substitute,

Commerce relies on various “secondary” sources of information (the petition, the final

determination from the investigation, prior administrative reviews, or any other information

placed on the record), 19 U.S.C. § 1677e(b), (c), to select a proxy that should be a

“reasonably accurate estimate of the respondent’s actual rate, albeit with some built-in

increase intended as a deterrent to noncompliance.” F.LLI de Cecco Di Filippo Fara S.

Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000) (“de Cecco”).

       When selecting an appropriate total AFA proxy, “Commerce must balance the

statutory objectives of finding an accurate dumping margin and inducing compliance.”

Timken Co. v. United States, 354 F.3d 1334, 1345 (Fed. Cir. 2004). The proxy’s purpose

“is to provide respondents with an incentive to cooperate, not to impose punitive,

aberrational, or uncorroborated margins.” de Cecco, 216 F.3d at 1032. Although a higher

AFA rate creates a stronger incentive to cooperate, “Commerce may not select
Court No. 13-00071                                                                 Page 8

unreasonably high rates having no relationship to the respondent's actual dumping

margin.” Gallant Ocean (Thailand) Co. v. United States, 602 F.3d 1319, 1323 (Fed. Cir.

2010) (citing de Cecco, 216 F.3d at 1032).          “Commerce must select secondary

information that has some grounding in commercial reality.” Id. 1323-24.

       As de Cecco explained, these requirements are logical outgrowths of the statute’s

corroboration requirement, see de Cecco, 216 F.3d at 1032, which mandates that

Commerce, to the extent practicable, corroborate secondary information with

independent sources reasonably at its disposal. 19 U.S.C. § 1677e(c). In practice

“corroboration” involves confirming that secondary information has “probative value,”

19 C.F.R. § 351.308(d) (2013), by examining its “reliability and relevance.” Mittal Steel

Galati S.A. v. United States, 31 CIT 730, 734, 491 F. Supp. 2d 1273, 1278 (2007) (citing

Ball Bearings and Parts Thereof from France, Germany, Italy, Japan, Singapore, and the

United Kingdom, 70 Fed. Reg. 54,711, 54,712-13 (Dep’t of Commerce Sept. 16, 2005)

(final results admin. reviews)). More simply, to corroborate the selection of a total AFA

rate, Commerce must, to the extent practicable, “demonstrate that the rate is reliable and

relevant to the particular respondent” in light of the whole record before it. Yantai Xinke

Steel Structure Co. v. United States, 36 CIT ___, ___, Slip Op. 12-95 at 27 (July 18,

2012); PSC VSMPO-AVISMA Corp. v. United States, 35 CIT ___, ___, 755 F. Supp. 2d

1330, 1336-37 (2011) (citing Gallant Ocean, 602 F.3d at 1323-24); de Cecco, 216 F.3d

at 1032 (“Obviously a higher adverse margin creates a stronger deterrent, but Congress

tempered deterrent value with the corroboration requirement. It could only have done so

to prevent the petition rate (or other adverse inference rate), when unreasonable, from
Court No. 13-00071                                                                 Page 9

prevailing and to block any temptation by Commerce to overreach reality in seeking to

maximize deterrence.”).

      Before turning to the specific facts, the court addresses Hubscher’s contention that

the Chevron framework governs the court’s review of that Commerce’s total AFA

selection. For Hubscher, the 247.65% rate represents an unreasonable application of the

statute under the second prong of Chevron. Pl.’s Br. at 15. The court does not agree

that the reasonableness of Commerce’s corroboration of the total AFA rate is a Chevron

issue; it is instead a substantial evidence question in which the court reviews the

reasonableness of Commerce’s actions against a known legal standard given the facts

and circumstances of the administrative record. More specifically, the issue in this case

is whether Commerce, to the extent practicable, reasonably confirmed the reliability and

relevance of the highest rate in the petition as a reasonable proxy for Hubscher’s actual

rate plus some built-in increase intended as a deterrent against non-compliance.

                                     Corroboration

      The administrative record in the first administrative review had limited information,

as did the record for the investigation (an “independent source of information” reasonably

at Commerce’s disposal).       Hubscher, for its part, identifies only “three possible

alternatives” to the petition rate: (1) Yama’s 0.00% rate, (2) the 123.83% separate rate,

and (3) a hypothetical rate calculated using Hubscher’s U.S. sales data or Yama’s factors

of production (“FOP”) data from the investigation, with all three rates including some

unspecified “factor” added “for deterrence.” Pl.’s Reply to Def.’s and Def.-Intervenor’s
Court No. 13-00071                                                                 Page 10

Resp. Brs. to Pl.’s R. 56.2 Mot. at 6-7; see Pl.’s Br. at 25-26.3 Commerce explained that

the first two are not valid alternatives because those rates were assigned to cooperative

parties. See Decision Memorandum at 10 (“The Department is not required to assign to

an uncooperative respondent such as Hubschercorp a rate assigned to cooperative

respondents in the same case.”). Hubscher’s last proposed alternative, a hypothetical

rate using Hubscher’s U.S. sales data or Yama’s FOP data from the investigation, is more

illusory than real because Hubscher provides no calculation. Hubscher also apparently

failed to make this specific argument before the agency. The Decision Memorandum

contains no reference to an argument by Hubscher that Commerce should calculate a

more reasonable total AFA rate for Hubscher based on its record information. See

Memorandum at 4-5 (summarizing Hubscher’s arguments before Commerce); see also

19 C.F.R. § 351.309(c)(2) (“The case brief must present all arguments that continue in

submitter’s view to be relevant to the final determination.”); Bestpak, 716 F.3d 1370, 1381.

       Along with apparently limited total AFA proxy choices, Commerce had limited data

from which to conduct its corroboration. Commerce did, however, attempt to piece


3
  The court notes that there may be other alternatives, for example, ones derived directly
from Yama’s transaction specific margins, such as an average of a subset of those
margins, see, e.g., Qingdao Taifa Group Co. v. United States, 35 CIT ___, ___, 780 F.
Supp. 2d 1342, 1347 (2011) (“Commerce calculated the weighted-average margin of
145.90% using data from the sales of the three models with the highest margins, which
accounted for 36% of Taifa's total sales by quantity.”); Lifestyle Enter., Inc. v. United
States, 37 CIT ___,___, 896 F. Supp. 2d 1297, 1301-02 (2013) (“Commerce decided to
look at only the top 15% of these ranked Yihua Timber sales. Commerce then took the
simple average of these weighted-average dumping margins for each product type to
arrive at an 83.55% margin for Orient.” (citations omitted)), but Hubscher did not propose
any of these alternatives before Commerce. See Corroboration Memorandum at
2 (“Hubschercorp does not offer an alternative analysis for the Department to
consider . . . .”).
Court No. 13-00071                                                                  Page 11

together a connection between Hubscher and the petition rate. As Commerce explained,

during the period of review Hubscher sourced its subject merchandise from Yama. Yama,

in turn, had a number of model-specific transactions during the prior proceeding (the

investigation) that fell within the range of the petition rate. Corroboration Memorandum

at 3. Because Hubscher purchased all of its subject merchandise from Yama, Commerce

inferred that Hubscher’s commercial reality reflected these higher-margin transactions.

See Decision Memorandum at 9 n.26 (“[I]t is not unreasonable to infer that Hubschercorp

could sell subject merchandise to those companies at the same dumping levels.”).

       Commerce further analyzed Yama’s higher-margin transactions to determine if

they were somehow unusual or unusable, and concluded, based on both the number of

sales and the quantity of ribbons sold, that “there is nothing about those transactions that

calls into question their commercial nature or suggests that they were aberrational.”

Decision Memorandum at 10; see also Corroboration Memorandum at 3 (containing

Commerce’s analysis of Yama’s proprietary data). The number of transactions and the

quantity of ribbon in those transactions are not so miniscule as to be immaterial. Cf., e.g.,

Dongguan Sunrise Furniture Co. v. United States, 36 CIT ___, ___, 865 F. Supp. 2d 1216,

1232-34 (2012) (remanding AFA rate to Commerce for further consideration because

transactions purporting to corroborate rate were “miniscule”).4 Hubscher has also not


4
  Specifically, Commerce noted that it analyzed [[ ]] Yama model specific transactions
that were higher than the petition rate, and that those transactions amounted to [[        ]]
percent by quantity of Yama’s total yards of ribbon sold during the period of investigation.
Commerce also noted that it “did not include in its corroboration analysis a number of
Yama’s model-specific margins which were well above the highest margin of [[               ]]
percent (up to a margin of [[            ]] percent).” Corroboration Memorandum at 3
(emphasis in original).
Court No. 13-00071                                                                Page 12

argued that those transactions are unusual with respect to quantity or model. Cf. iScholar,

Inc. v. United States, 35 CIT ___, ___, Slip Op. 11-04 at 5-7 (Jan. 13, 2011) (sustaining

Commerce’s use of a cooperating respondent’s highest transaction-specific margin as

the total AFA rate for uncooperative respondent where the transaction fell within the

cooperating respondent’s usual quantity and range of models sold).

       What Commerce did here was analyze the limited available data and infer that

Hubscher’s commercial reality reflected Yama’s higher-margin transactions. Hubscher

has chosen not to refute that inference directly, instead arguing generally that Yama’s

higher-margin, model-specific data cannot be relevant or material given Yama’s low

calculated rate (0.00%). See Pl.’s Br. at 15-26; Pl.’s Reply at 1-9. It is, in effect, a

common sense argument that the petition rate of 247.65% cannot be reliable or relevant

for any other respondent because the only calculated margin from any segment of the

proceeding is Yama’s zero. Hubscher argues that even though several of Yama’s model-

specific transactions (for thousands of yards of ribbon) had margins near or greater than

the petition rate, Yama sold millions of yards of ribbon, the vast majority of which had no

or low margins, meaning the petition rate of 247.65% is aberrational at best, and punitive

at worst. From this vantage point, Hubscher invites the court to declare the petition rate

unlawful, confident that Yama’s rate reflects everyone’s commercial reality. See Pl.’s

Reply at 3, 5.

       The court though is reluctant to accept this invitation. As the Bestpak litigation

revealed, Yama’s rate does not reflect all respondents’ commercial reality. After all, in

Bestpak, an otherwise cooperative separate rate respondent argued all along that it was
Court No. 13-00071                                                                   Page 13

entitled to Yama’s zero, 716 F.3d at 1381, but ultimately voluntarily dismissed the litigation

rather than be individually reviewed, conceding that the 123.83% separate rate covered

its subject merchandise. See Form 8 Notice of Dismissal, Yangzhou Bestpak Gifts &

Crafts Co. v. United States, No. 10-00295 (USCIT Nov. 13, 2013), ECF No. 76. The more

pressing problem for Hubscher is its apparent unwillingness to directly address

Commerce’s inference about Hubscher’s commercial reality reflecting Yama’s higher-

margin transactions. The court anticipated an immediate and vigorous challenge from

Hubscher explaining why this inference must be unreasonable.              Hubscher is best

positioned to explain from the available data that the 247.34% rate simply cannot

reasonably reflect Hubscher’s commercial reality. Recall that Hubscher sourced all its

merchandise from Yama. And yet, Hubscher never offers a specific explanation about its

own “commercial reality” from the available information on the record. The court is left

wondering why Hubscher did not do more when Commerce preliminarily assigned it the

247.34% rate corroborated with a small subset of Yama’s data. Hubscher did not request

that Commerce move the entire Yama data set onto the record for Hubscher to analyze

against its own record data. That omission, in turn, has left a limited administrative record

with limited data against which the court can analyze whether the AFA rate is a reasonably

accurate estimate of Hubscher’s actual rate albeit with some built-in increase intended as

a deterrent against noncompliance.        Hubscher, therefore, passed up an important

opportunity to crunch Yama’s data against its own data and create a narrative of its own

commercial experience to discredit the petition rate as an unreasonable AFA choice. The

court cannot understand why Hubscher let this opportunity pass.             Is this because
Court No. 13-00071                                                                  Page 14

Hubscher already knew from analyzing its own cost data (not provided to Commerce) that

its “actual” margin was higher than Hubscher could tolerate, perhaps even in the range

of the petition rate, or higher, resulting in a litigation strategy to deflect attention away

from Hubscher’s own data, leaving only general arguments about Yama’s data?

       In the Final Results, Decision Memorandum, and Corroboration Memorandum

Commerce has to the extent practicable offered a reasonable path for the court to

conclude that the petition rate of 247.34% may very well be a reasonably accurate

estimate of Hubscher’s actual rate, albeit with some built-in increase intended as a

deterrent to noncompliance. In the court’s view, Hubscher has left too much unexplained

and has not met its burden to demonstrate the unreasonableness of Commerce’s

corroboration, see 28 U.S.C. § 2639(a)(1) (“[T]he decision of . . . the administering

authority . . . is presumed to be correct. The burden of proving otherwise shall rest upon

the party challenging such decision.”).

       Although courts are generally suspicious of petition rates, see, e.g., de Cecco,

216 F.3d at 1032-33; Gallant Ocean, 602 F.3d at 1324; but see Universal Polybag Co.

v. United States, 32 CIT at 918-22, 577 F. Supp. 2d at 1298-1301 (sustaining highest rate

in petition as total AFA), Congress has not foreclosed their use, see 19 U.S.C.

§ 1677e(b)(1); de Cecco, 216 F.3d at 1032 (“the statute explicitly allows for use of ‘the

petition’ to determine relevant facts when a respondent does not cooperate.”).

Commerce’s discretion to use a petition rate as total AFA narrows considerably when the

record and “independent sources” of information present numerous calculated rates

among various respondents, potentially better informing the “commercial reality” or
Court No. 13-00071                                                                 Page 15

“actual rate” of a non-cooperative party. That was the case in Gallant Ocean, where

dozens of voluntary respondents had received calculated rates that in turn informed the

Federal Circuit’s analysis of the reasonableness of Commerce’s use of a petition rate as

AFA. Gallant Ocean, 602 F.3d at 1323-24. Here, in the investigation and first review,

there were no voluntary respondents, and only one calculated rate for a mandatory

respondent. Commerce noted this difference:

       In the instant case, on the other hand, the Department does not have
       multiple calculated rates for several respondents, nor were there multiple
       calculated rates in the original investigation. Furthermore, unlike in the
       administrative review underlying Gallant Ocean, the administrative record
       here does not contain any information to determine whether a previous
       respondent was “similarly-sized and similarly-situated” to Hubschercorp,
       and there are not “abundant resources” from which the Department could
       determine a different rate.

Decision Memorandum at 10. Hubscher continues to argue that “the facts of its situation

mirror” those in Gallant. Pl.’s Br. at 17. But they do not. Here there was “no verified

sales data on the record for the relevant period of review,” as Hubscher “was the only

respondent and it failed to cooperate. . . . Under such circumstances, Commerce's

corroboration may be less than ideal because the uncooperative acts of the respondent

has deprived Commerce of the very information that it needs to link an AFA rate to

[respondent’s] commercial reality.” Qingdao Taifa Group Co. v. United States, 35 CIT

___, ___ 780 F. Supp. 2d 1342, 1349 (2011).           Congress understood this type of

information shortfall might occur when it included the proviso, “to the extent practicable,”

within Commerce’s corroboration requirement. See 19 U.S.C. § 1677e(c); H.R. Rep. No.

103-826, pt. 1 at 105 (1994), reprinted in 1994 U.S.C.C.A.N. 3773, 1994 WL 548728.
Court No. 13-00071                                                                Page 16

(“The fact that corroboration may not be practicable in a given circumstance will not

prevent the agencies from applying an adverse inference under subsection (b).”).

       Plaintiff does not argue or suggest that Commerce is to blame for the limited

number of calculated rates (or the lack of verified transaction data from other respondents

beside Yama). This is understandable. As has often been explained, Commerce does

not have subpoena power and cannot compel participation in antidumping proceedings.

See Essar Steel Ltd. v. United States, 678 F.3d 1268, 1276 (Fed. Cir. 2012) (“Because

Commerce lacks subpoena power, Commerce’s ability to apply adverse facts is an

important one.”). Although Commerce may designate mandatory respondents, there is

no guarantee those respondents will cooperate or participate. Here, over the course of

the investigation and first review, one mandatory respondent cooperated, and two did not.

And even Bestpak, one of the separate rate respondents that expended significant time,

energy, and expense to litigate the general issue of the separate rate, ultimately chose

not to be individually reviewed, voluntarily dismissing its separate rate litigation.

See Form 8 Notice of Dismissal, Yangzhou Bestpak Gifts & Crafts Co. v. United States,

No. 10-00295 (USCIT Nov. 13, 2013), ECF No. 76. There were eleven other separate

rate respondents in the investigation.    Another came forward in the instant review.

None chose to be voluntarily reviewed. And if Bestpak is an indicator, even if Commerce

had designated five mandatory respondents, each may not have cooperated, yielding five

additional total AFA rates, five separate corroboration analyses and memoranda, all of

which would not further enlighten us about the commercial reality of this particular

industry. Commerce’s inability to mandate participation in its proceedings means that
Court No. 13-00071                                                               Page 17

interested parties bear the primary burden of developing the administrative record.

See QVD Food Co. v. United States, 658 F.3d 1318, 1325 (Fed. Cir. 2011). In Gallant

Ocean there were many willing and cooperative voluntary respondents who assumed that

burden. Here, there were none.

      Since Gallant Ocean the Court of International Trade has in two cases suggested

that when Commerce assigns a total AFA rate “in multiples of 100 percent, a bit more

corroboration or record support is warranted.” Qingdao Taifa Group Co. v. United States,

34 CIT ___, ___, 760 F. Supp. 2d 1379, 1386 n.7 (2010) (holding unreasonable

Commerce’s corroboration of total AFA rates of 383.60% and 227.73%), appeal after third

remand, 780 F. Supp. 2d 1342 (sustaining Commerce’s corroboration of lower revised

total AFA rate of 145.90%); Lifestyle Enterprise, Inc. v. United States, 35 CIT ___, ___,

768 F. Supp. 2d 1286, 1298 (2011) (holding unreasonable Commerce’s corroboration of

216.01% total AFA rate: “As the rate becomes larger and greatly exceeds the rates of

cooperating respondents, Commerce must provide a clearer explanation for its choice

and ample record support for its determination.”), after remand, 36 CIT ___, 844 F. Supp.

2d 1283, 1288-91 & n.7 (2012) (holding unreasonable Commerce’s further attempted

corroboration of 216.01% rate: “[Petitioner] could not point to any evidence on or off the

record supporting its assertion that any large manufacturing company in any sector was

dumping at a rate over 200%. Indeed, the idea that a large profit-seeking corporation

deemed separate from the country-wide entity would dump its merchandise at rates over

200% seems inconsistent with commercial reality, absent some evidence to the

contrary.”), after second remand, 36 CIT ___, 865 F. Supp. 2d 1284 (2012) (holding
Court No. 13-00071                                                              Page 18

unreasonable Commerce’s corroboration of lower revised total AFA rate of 130.81%),

after third remand, 37 CIT ___, 896 F. Supp. 2d 1297 (2013) (sustaining Commerce’s

corroboration of lower revised total AFA rate of 83.55%).

      Qingdao and Lifestyles, two cases that Hubscher does not cite or discuss, both

involved proceedings with ample data and “abundant resources,” Gallant Ocean,

602 F.3d at 1324, which in turn significantly limited Commerce’s discretion to choose

otherwise high AFA margins in multiples of 100 percent. Commerce’s discretion here,

however, was no so limited.       Commerce designated Hubscher as a mandatory

respondent. When Hubscher withdrew, Hubscher knew there were limited AFA proxies

from which to choose, and limited data from which to practicably corroborate the rate.

Hubscher sourced its entire inventory of subject merchandise from Yama, a fact

Commerce utilized to practicably tie the petition rate to Hubscher through Yama’s higher-

margin transactions, which were near or above the petition rate. Perhaps, over time, as

more calculated rates emerge, the highest rate in the petition may be discredited and

proven an unreasonable AFA proxy. At this juncture, however, Commerce appears to

have reasonably corroborated that rate, “to the extent practicable,” and correspondingly,

Hubscher has failed to persuade the court that Commerce’s selection of that rate and

accompanying corroboration is unreasonable.

                         Government Ownership or Control

      Hubscher also argues that 247.65% is “punitive” because Commerce also used

the petition rate as the China-wide rate. Pl.’s Reply at 6-7; see Pl.’s Br. at 24-25.

According to Hubscher this means that Commerce implicitly found that Hubscher was
Court No. 13-00071                                                                Page 19

subject to government ownership or control even though it has no ties to the Government

of China. Id. This is a straw man argument. Commerce never found, directly or implicitly,

that Hubscher was subject to government control. What Commerce did was use the

highest rate in the petition twice, first as the China-wide rate in the investigation, and

second, as total AFA for Hubscher in the first administrative review. Commerce did not

conflate the two, repeatedly referring to Hubscher’s AFA margin as the “petition rate,” not

the China-wide rate.     Compare Decision Memorandum at 4, 6, 9-11 (describing

Hubscher’s AFA rate as being the highest petition rate, not the China-wide rate), with

LTFV Final Results, 75 Fed. Reg. at 41,810-11 (continuing preliminary application of the

“PRC-wide rate” as AFA to an uncooperative mandatory respondent because of its failure

to answer questionnaire regarding government ownership and control); Lifestyle

Enterprise, Inc. v. United States, 35 CIT ___, ___, 768 F. Supp. 2d 1286, 1298 n.12

(2011) (“This claim lacks merit as Commerce did not assign the PRC-wide rate per se,

but rather selected the same rate based on separate considerations.”), after remand,

36 CIT ___, 844 F. Supp. 2d 1283 (2012), after second remand, 36 CIT ___, 865 F. Supp.

2d 1284 (2012), after third remand, 37 CIT ___, 896 F. Supp. 2d 1297 (2013); cf. Gerber

Food (Yunnan) Co. v. United States, 29 CIT 753, 771-73, 387 F. Supp. 2d 1270, 1287-

88 (2005), after remand 31 CIT 921, 491 F. Supp. 2d 1326 (2007), after second remand,

32 CIT 995 (2008) (remanding selection of country-wide rate as AFA because, among

other reasons, Commerce unreasonably made an implicit finding of government

ownership or control).
Court No. 13-00071                                                            Page 20

                                    IV. Conclusion

         For the foregoing reasons Hubscher’s motion for judgment on the agency record

is denied. Judgment will be entered accordingly.



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


Dated:      April 15, 2014
            New York, New York
