Davis Wire Corp. v. United States (180 F. Supp. 3d 1187, 2016)

OPINION AND ORDER

Timothy C. Stanceu, Chief Judge

Stanceu, Chief Judge: Plaintiffs Davis Wire Corp. and Insteel Wire Products Company contest a negative less-than-fair-value determination (“Final Determination”) that the International Trade Administration, U.S. Department of Commerce (“Commerce” or the “Department”) issued to conclude an antidumping duty investigation of prestressed concrete steel rail tie wire (“PC tie wire”) from' Thailand. Final Determination of Sales at Not Less than Fair Value:-.Prestressed Concrete Steel Rail Tie Wire from Thailand, 79 Fed. Reg. 25,574 (Int’l Trade Admin. May 5, 2014) (“Final Determination”). In the Final Determination, Commerce calculated a 0.00% weighted-average dumping margin for Siam Industrial Wire Company, Ltd. (“SIW”), a Thai producer and exporter of PC tie wire. Because SIW was the sole company investigated, Commerce terminated the investigation without issuing an antidumping duty order. SIW is the defendant-intervenor in this action. Plaintiffs are U.S. producers of PC tie wire and were the petitioners in the investigation.

Plaintiffs challenge three aspects of the Department’s determination of normal value in the Final Determination: (1) the Department’s selection of South Africa as a viable comparison market; (2) the Department’s exclusion of certain quantities of a material, wire rod, from its calculation of SIW’s cost of production (“COP”); and (3) the Department’s calculation of a general and administrative (“G & A”) expense ratio for SIW. Compl. ¶¶ 9-16 (June 26, 2014), ECF No. 9.

Before the court is plaintiffs’ motion for judgment upon the agency record pursuant to USCIT Rule 56.2. Mot. for J. on Agency R. 56.2 (Oct. 17, 2014), ECF No. 23 (“Pis.’ Mot.”). Also before the court is a request by defendant United States that the Final Determination be remanded in part to allow Commerce to reconsider- its exclusion from its calculation of SIW’s cost of production certain wire rod inputs that SIWs PC tie wire division procured internally from another of SIW’s divisions. Resp. to Pis.’ Mot. for J. on the Admin. R. (Jan. 16, 2015), ECF No. 34 (public), ECF No. 33 (conf.) (“Def.’s Resp.”). The court grants defendant’s request, and it also remands the Final Determination for reconsideration of the Department’s calculation of the G & A ratio. The court declines to order relief on plaintiffs’ remaining challenges.

I. BACKGROUND

A. The Department’s Antidumping Duty Investigation

In response to petitions filed by Davis Wire and Insteel Wire, Commerce initiated the antidumping duty investigation in May 2013 to examine imports -of certain PC tie wire from Thailand entered during the period of April 1, 2012 through March 81, 2013 (“period of investigation” or “POI”). Prestressed Concrete Steel Rail Tie Wire■ From Mexico, the People’s Republic of China, and Thailand: Initiation of Antidumping Duty Investigations, 78 Fed. Reg. 29,325, 29,325 (Int’l Trade Admin. May 20, 2013).

In late 2013, Commerce issued a negative preliminary determination (“Preliminary Determination”) upon finding that U.S. sales of the merchandise under consideration had not been, and were not likely to be, made at less than fair value. Prestressed Concrete Steel Rail Tie Wire From Thailand: Preliminary Determination of Sales at Not Less Than Fair Value and Postponement of Final Determination, 78 Fed. Reg. 75,547 (Int’l Trade Admin. Dec. 12, 2013) {“Prelim. Determination”); Decision Mem. for the Prelim, Determination in the Antidumping Duty Investigation of Prestressed Concrete Steel Tie Wire from Thailand, A-549-829 (Dec. 5, 2013) (P.R. Doc. 119), available at http://enforcement.trade.gov/frn/summary/ thailand/201329692-l.pdf (last visited , June 23, 2016) {“Prelim. Decision Mem,.”). To determine whether U.S. sales of PC tie wire from Thailand were made at less than fair value, Commerce compared POI weighted-average constructed export price to POI weighted-average normal value (average-to-average methodology). Prelim. Decision Mem. 7; see 19 C.F.R. § 351.414(b)(1) (describing the “average-to-average method” of comparing home market and U.S. sales), and id. § 351.414(c)(1) (“In an investigation, the Secretary normally will use the average-to-average method.”). Basing SIW’s POI weighted-average normal value on constructed value, Commerce assigned SIW a de minimis preliminary weighted-average dumping margin of 0.07% ad valorem. Prelim. Determination, 78 Fed. Reg. at 75,548.

Commerce published its Final Determination on May 5, 2014. Final Determination, 79 Fed. Reg. at 25,574. Commerce released an accompanying Issues and Decision Memorandum. Issues and Decision Mem. for the Antidumping Duty Investigation of Prestressed Concrete Steel Rail Tie Wire from Thailand, A-549-829 (Apr. 28, 2014), (P.R. Doc. 175), available at http://enforcement.trade.gov/frn/summary/ thailand/2014-10237-l.pdf (last visited June 23, 2016) (“Final Decision Mem.”). Using SIWs third-country POI sales to South Africa, rather than constructed value, as the basis for determining normal value, Commerce assigned SIW a final margin of 0.00% and concluded the investigation. Final Determination, 79 Fed. Reg. at 25,575 (“As our final determination is negative, this proceeding is terminated.”).

B. Litigation before the Court óf International Trade

Plaintiffs initiated this action by filing a summons on June 3, 2014 and a complaint on June 26, 2014. Summons, ECF. No. 1; Compl. ¶ 1. Plaintiffs filed their motion for judgment on the agency record and accompanying brief on October 17, 2014. Pis.’ Mot. 1; Br. in Support of Pis.’ Rule 56.2 Mot. for J. on Agency R., ECF No. 26 (public), ECF No. 24 (conf.) (“Pis.’ Br.”). On January 16, 2015, defendant and defendant-intervenor each filed responses opposing plaintiffs’ motion. Def.’s Resp.; Resp. of Def.-Intervenor in Opp’n to Mot. for Rule 56.2 J. on the Agency R. (Jan. 16, 2015), ECF No. 32 (public), ECF No. 31 (conf.) (“Def.-Intervenor’s Resp.”). Plaintiffs filed their reply on February 17, 2015. Pis.’ Reply Br., ECF No. 38 (public), ECF No. 37 (conf.) (“Pis.’ Reply”).

II. DISCUSSION

A. Jurisdiction and Standard of Review

The court exercises jurisdiction according to section 201 of the Customs Courts Act of 1980, 28 U.S.C.. § 1581(c), under which the court may review a nega-five final determination of sales at less than fair value in an action brought under section 516A(a)(2) of the Tariff Act of 1930 (“Tariff Act”); see 19 U.S.C. § 1516a(a)(2)(A), (a)(2)(B)(ii). Upon judicial review, the court will hold unlawful any finding, conclusion, or determination not supported by substantial record evidence or otherwise not in accordance with law. Id. § 1516a(b)(l)(B)(i). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938).

B. The Department’s Selection of South Africa as the Comparison Market

Plaintiffs challenge the Department’s decision in the Final Determination to base normal value on SIWs sales to South Africa during the POI. Pis.’ Br. 17-29. Plaintiffs argue that Commerce instead should have determined normal value on a constructed value basis. See, e.g., id. at 2-3; Pis.’ Reply 13, 21.

Section 773(a)(l)(B)(i) of the Tariff Act identifies normal value (“NV”) as, ordinarily, the price at which the foreign like product is first sold for consumption in the exporting country (the “home market”). 19 U.S.C. § 1677b(a)(l)(B)(i). In the absence of .a viable home market, i.e., a market with sufficient sales of the foreign like product during the relevant period, Commerce may calculate normal value using the price at which the foreign like product is sold “for consumption in a country other than the exporting country or the United States” (a “third country” 'comparison market), provided certain conditions are met. Id. §§ 1677b(a)(l)(B)-(a)(l)(C). Among those conditions are that “such price is representative,” id. § 1677b(a)(l)(B)(ii)(I), and that Commerce “does not determine that the particular market situation in such other country prevents a proper comparison with the export price or constructed export price,” id. § 1677b(a)(l)(B)(ii)(III). If these conditions are not met, Commerce may determine normal value on the basis of constructed value. Id. § 1677b(a)(4).

During the preliminary phase of the investigation, Commerce found that “the wire product that SIW sold in Thailand did not meet at least one of the requirements specified in the ASTM [American Society of Testing Materials specification A881/ A881M] standard” and so found that “SIW’s wire product sold in Thailand was not a ‘foreign like product’ within the meaning of section 771(16) of the [Tariff] Act and could not be used as a basis for NV.” Prelim. Decision Mem. 7. During the investigation, the petitioners alleged that, according to SIW’s third-country sales data, “a ‘particular market situation’ exists which renders sales to South Africa inappropriate as a basis for NV.” Id. Explaining that the petitioners’ allegation “raises questions as to whether SIW’s sales to South Africa are suitable as a basis for NV,” and that it lacked “sufficient time to analyze the matter,” Commerce preliminarily based normal value on constructed value. Id. at 8; see 19 U.S.C. § 1677b(a)(4). As to plaintiffs’ allegation of a “particular market situation,” Commerce explained, further, that it intended to request' “additional information from SIW with respect to this issue” and would “verify' this information and consider it for purposes of the final determination.” Prelim. Decision Mem. 8. SIW submitted its responses to the Department’s request for additional information on December 30, 2013. See, e.g., Response of the Siam Industrial Wire Co, Ltd. to the Dept, of Commerce’s First Suppl. Section D Antidumping Questionnaire (P.R. Docs. 136-141) (C.R. Docs. 116-134). In the Final Determination, Commerce rejected petitioners’ allegation of a particular market situation and determined normal value based on SIW’s sales in the South Africa market. Final Decision Mem. 3,18.

Plaintiffs claim that Commerce was required to find, in accordance with section 773(a)(l)(B)(ii)(III), that “the ‘particular market situation’ in South Africa prevented a ‘proper’ price comparison” with constructed export price. Pis.’ Br. 20; see 19 U.S.C. § 1677b(a)(l)(B)(ii)(III). Plaintiffs claim, further, that use of SIW’s South Africa sales was unlawful because the prices in those sales were not “representative” as required by section 773(a)(l)(B)(ii)(I) of the Tariff Act. Pis.’ Br. 22, 29; see 19 U.S.C. § 1677b(a)(l)(B)(ii)(I). For the following reasons, the court concludes that plaintiffs cannot prevail on either of these claims.

1. Commerce Permissibly Declined to Find a “Particular Market Situation” in South Africa in Response to Plaintiffs’ “Rejected Merchandise” Argument

Rejecting plaintiffs’ allegation, Commerce found in the Final Determination that there was not a “particular market situation” in South Africa that would prevent a proper comparison with SIW’s U.S. sales. Final Decision Mem. 18. The term “particular market situation” is not defined by the statute, the Statement of Administrative Action accompanying the Uruguay Round Agreements Act (“SAA”), the Department’s regulations, or the Preamble accompanying promulgation of the Department’s regulations. See 19 U.S.C. §§ 1677b(a)(l)(B)(ii)(III), (a)(l)(C)(iii); Uruguay Round Agreements Act Statement of Administrative Action, H.R. Doc. No. 103-316, 656, 822 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4162 (“