Diamond Sawblades Manufacturers' Coal. v. United States

This action is a challenge to the Department of Commerce ("Commerce")'s remand redetermination of the final results of the antidumping duty order on diamond sawblades and parts thereof from the People's Republic of China ("PRC"). Redetermination Pursuant to Court Remand Order in Diamond Sawblades Manufacturers' Coalition v. United States , Consol. Court No. 16-00124, Doc. No. 82 (Aug. 7, 2018) ("Remand Redetermination"). Plaintiffs and Consolidated Plaintiffs oppose Commerce's decision on remand to rescind the administrative review with respect to exporter Weihai Xiangguang Mechanical Industrial Co., Ltd. ("Weihai") and the subsequent use of the rate for the only remaining respondent, Jiangsu Fengtai Diamond Tool Manufacturing Co., Ltd. ("Jiangsu"), as the basis for calculating the all-others rate. 1

BACKGROUND

The court assumes all parties are familiar with the facts of the case as discussed in Diamond Sawblades Mfr.'s Coalition v. United States , 301 F.Supp.3d 1326 (CIT 2018). For the sake of convenience, the facts relevant to review of Commerce's remand redetermination are summarized below.

This opinion concerns Commerce's fifth periodic review of the antidumping duty order on diamond sawblades and parts thereof from the PRC covering the period of November 1, 2013, to October 31, 2014. 81 Fed. Reg. 38,673 (June 14, 2016) ("Final Results"). In its decision ordering remand, the court directed 2 Commerce to reconsider its decision denying U.S. Importer Robert Bosch Tools Corporation ("Bosch")'s request for withdrawal of its request for review of Weihai. 3 Diamond Sawblades , 301 F.Supp.3d at 1357-59 .

In its remand redetermination, Commerce adjusted its freight calculation as instructed by the Court and accepted Bosch's late withdrawal request. Remand Redetermination at 8. As no other requests for review of Weihai remained, Commerce rescinded its review of Weihai leaving only a single mandatory respondent-Jiangsu. Jiangsu's rate was then used pursuant to 19 U.S.C. § 1677f-1(c)(2) 4 to set the all-others rate. Because the previous all-others rate had been a weighted average of Weihai and Jiangsu's rate, the final results rate was 29.76% while the remand redetermination rate was 56.67%. Remand Redetermination at 19-20.

Sixteen non-selected separate rate respondents appealed Commerce's decision to rescind Weihai's rate in the calculation of the all-others rate. See Consolidated Plaintiffs' Opposition to Commerce's Final Remand Determination, Doc. No. 87 ("Pl. Chengdu Br."). Consolidated Plaintiffs Chengdu ("Chengdu") 5 challenge Commerce's decision on remand to resort to the "reasonableness test" in assessing Bosch's late withdrawal rather than the "extraordinary circumstances test." Pl. Chengdu Br. at 4-8. They argue that the Court of Appeals for the Federal Circuit (CAFC)'s decision in Glycine , while factually similar, does not have the same "legal predicate" as Commerce's original determination. Id. at 4-5. They argue that Commerce misinterprets how the new regulation 19 C.F.R.§ 351.302(c), adopted since Glycine , interacts with the older regulation 19 C.F.R. 351.213(d)(1). Id. at 6-7.

Consolidated Plaintiffs Bosun ("Bosun") argue that Commerce's initial selection of only two mandatory respondents and the resulting use of only Jiangsu's rate in setting the all-others rate was unsupported by substantial evidence. Bosun's Comments in Opposition to U.S. Department of Commerce's Remand Redetermination, Doc. No. 86, 3-7 ("Pl. Bosun Br."). Bosun then proposed several alternatives to using Jiangsu's rate alone, including: use of Weihai's assessed rate despite its review having been rescinded, assigning Bosun its rate from the administrative review immediately prior to the instant review, or calculating an individual rate for Bosun on remand. Pl. Bosun Br. at 8-15. Finally, Bosun argues that an exhaustion bar does not apply as the issue now before the court did not arise until the remand redetermination. Id. at 15-17.

In response, the Government and Plaintiffs/Defendant-Intervenors Weihai and Diamond Sawblade Manufacturers' Coalition ("DSMC") argue in support of Commerce's decisions to rescind the review of Weihai and to base the all-others rate on Jiangsu's calculated dumping margin. Defendant's Response to Comments on Remand Redetermination, Doc. No. 89, 5-17 ("Def. Br."); Weihai's Comments in Support of Final Results of Redetermination Pursuant to Court Order, Doc. No 88, 5-9 ("Weihai Br.); Response on Remand of Plaintiff/Defendant-Intervenor DSMC, Doc. No. 90, 6-13 ("DSMC Br."). The Government and Defendant-Intervenors defend Commerce's choice to apply the reasonableness test found in 19 C.F.R. § 351.213 (d)(1), instead of the extraordinary circumstances test found in 19 C.F.R.§ 351.302(c), to the withdrawal request as the correct interpretation of its regulations because the former provision concerns the specific instance at hand while the latter is a generally-applicable provision. Def. Br. at 6-8; see also Weihai Br. 7-9; DSMC Br. at 7-8. Further, the Government stresses that nothing in 19 C.F.R. § 351.302 (c) purports to modify or supersede 19 C.F.R. § 351.213 (d)(1). Def. Br. at 8-9. DSMC additionally argues that applying 19 C.F.R. § 351.302 (c) to the instant case would "render[ ] the final sentence of 19 C.F.R. § 351.213 (d)(1) superfluous." DSMC Br. at 7.

The Government argues that Commerce's decision to base the all-others rate on the sole remaining mandatory respondent, Jiangsu, was in accord with its practice and regulations and that Commerce was not required to use Bosun's proposed alternatives. Def. Br. 9-17. Finally, the Government argues that if Bosun wanted an individual examination, it should have sought individual review as a mandatory or voluntary respondent in the underlying administrative review and that any requests for such review now should be rejected. Id. at 16-17 . DSMC further argues that Bosun failed to exhaust administrative remedies. DSMC Br. at 9-11.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. 1581(c). The court will uphold Commerce's decision in an antidumping review unless it is "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. Application of the Reasonableness Test to Withdrawal of Review Requests

The legal landscape of Commerce's choice to apply a reasonableness standard begins with Glycine & More, Inc., v. United States . 880 F.3d 1335 (Fed. Cir. 2018). In that case, Baoding Moantong ("Baoding") and GEO Specialty Chemicals Inc. ("GEO") each requested review of an antidumping order on glycine from the PRC. GEO then filed a notice of withdrawal. Id. at 1341 . Baoding then filed a similar request and a request for extension of time. Id. Baoding, however, submitted its notice of withdrawal after the 90-day deadline to withdraw a request for review as established in 19 C.F.R. § 351.213 (d)(1).

Commerce denied Baoding's withdrawal pursuant to a 2011 guidance document (which Commerce refers to as a Notice) that stated that such untimely requests would be granted only in "extraordinary circumstances." Id. This Notice was not issued through notice and comment rulemaking but was merely an interpretation of 19 C.F.R. § 351.213 . Id. at 1342, 1345 . The CAFC determined that the Notice was an "incompatible departure from the clear meaning of the regulation," which states:

(d) Rescission of administrative review-

(1) Withdrawal of request for review. The Secretary will rescind an administrative review under this section, in whole or in part, if a party that requested a review withdraws the request within 90 days of the date of publication of notice of initiation of the requested review. The Secretary may extend this time limit if the Secretary decides that it is reasonable to do so.

19 C.F.R. § 351.213 (d)(1) (emphasis added).

Rather than an "extraordinary circumstances test," the CAFC found that the regulation provides Commerce with wide discretion to use a "reasonableness test" in deciding whether to extend a deadline for filing a withdrawal notice. Glycine , 880 F.3d at 1345 . Thus, the CAFC affirmed this court's decision to remand the issue to Commerce for it to use the reasonableness test. At base, the case stands for the proposition that Commerce cannot "effectively rewrite the substantive meaning of [a regulation] without going through the necessary notice and comment rulemaking." Id.

The instant case appears to be very similar to the factual situation in Glycine : multiple parties submitted requests for review, all parties withdrew their requests on time save for one who withdrew a few days late, and Commerce similarly denied the withdrawal after applying the extraordinary circumstances test. But here, as Chengdu points out, Commerce initially relied on a regulation passed through notice and comment after Glycine that codified the extraordinary circumstances test into section 351.302. See Diamond Sawblades and Parts Thereof from the People's Republic of China: Denial of a Late Withdrawal of Review Request A-570-900, P.R. 133 at 3-4 (May 12, 2015). The regulation took effect on October 21, 2013, before the start of this administrative review, and states that "[a]n untimely filed extension request will not be considered unless the party demonstrates that an extraordinary circumstance exists." 19 C.F.R. § 351.302 (c). The notice published alongside the final rule appears to indicate that this regulation applies to all time limits in antidumping and countervailing duty proceedings. 78 Fed. Reg. 57,790 , 57,791 (Sept. 20, 2013). Notably, however, the regulation does not specifically mention or modify 19 C.F.R. § 351.213 (d).

The parties rely on conflicting canons of statutory interpretation regarding Commerce's choice to apply the reasonableness test found in 19 C.F.R. § 351.213 (d). In its brief, Chengdu argues that the two provisions at issue must be read together because subsection 351.302(c) applies to all of section 351. Chengdu Br. at 6-8. By contrast, the Government argues that the more specific regulation- 19 C.F.R. § 351.213 (d), as it specifically concerns the withdrawal of requests for review-should control. Def. Br. at 7-8. 6

The court applies the same rules to interpret a regulation as it does to interpret a statute. See Roberto v. Dep't of Navy , 440 F.3d 1341 , 1350 (Fed. Cir. 2006). If a regulation is unambiguous, the court enforces the clear terms of the regulation and no attention need be paid to an agency's interpretation. Id. If, however, a regulation is ambiguous, then the court defers to an agency's reasonable and well-considered interpretation of its own regulation. See Christopher v. SmithKline Beecham Corp., 567 U.S. 142 , 159, 132 S.Ct. 2156 , 183 L.Ed.2d 153 (2012) ; Auer v. Robbins , 519 U.S. 452 , 461, 117 S.Ct. 905 , 137 L.Ed.2d 79 (1997) (internal citations omitted).

Neither of the regulations at issue clarifies how these two provisions are meant to interact. The Federal Register notices of initiation and the one published alongside the final version of section 351.302 are similarly unavailing. See 78 Fed. Reg. 3,367 (Jan. 16, 2013) ("Proposed Rule"); 78 Fed. Reg. 57,790 (Sept. 20, 2013) ("Final Rule"). Without clear guidance, Commerce reasonably decided to apply the regulation it found to be more specific to the issue of a withdrawal of a request for review, 19 C.F.R. § 351.213 (d). See Morales v. Trans World Airlines, Inc. , 504 U.S. 374 , 384, 112 S.Ct. 2031 , 119 L.Ed.2d 157 (1992) (noting that "it is commonplace of statutory construction that the specific governs the general"); see also Green v. Bock Laundry Mach. Co. , 490 U.S. 504 , 524-26, 109 S.Ct. 1981 , 104 L.Ed.2d 557 (1989) ; Crawford Fitting Co. v. J. T. Gibbons, Inc. , 482 U.S. 437 , 444-45, 107 S.Ct. 2494 , 96 L.Ed.2d 385 (1987). Additionally, this choice allows Commerce the flexibility to accept a withdrawal prior to conducting a potentially lengthy and resource-intensive review that perhaps no party desires. Commerce's interpretation passes the deferential test established by the Supreme Court. Accordingly, the court sustains Commerce's use of the reasonableness test in addressing untimely withdrawals of requests for review.

The court notes that there is no right not to be subject to review or individual examination. If all parties are content to rely on past rates, Commerce need not conduct a review. See 19 U.S.C. § 1675 (a). If a review is commenced, permitting withdrawal of previously filed requests for review is purely for the convenience of Commerce and the parties. Commerce need only act with reason. If it decides in the reasonable exercise of its discretion to continue the review or examine particular parties, it may do so whether the parties wish it or not.

II. Whether Commerce's Decision to Rescind Review of Weihai is Supported by Substantial Evidence

As noted above, Glycine 's holding does not apply to the initial decision here to use the extraordinary circumstances test. The decision does, however, provide some guidance on what is considered a reasonable withdrawal request that is useful to the court's analysis under the standard now applied. In Glycine , the CAFC found that the criteria for determining whether or not it is reasonable to accept a withdrawal "reflects concerns for not wasting departmental resources, for giving parties an opportunity to know the results of prior administrative reviews when applicable, and for not conducting undesired reviews, among other considerations." 880 F.3d at 1340 . In this instance, Bosch sought to withdraw its request for review of Weihai shortly after becoming aware that all other parties had withdrawn their requests, the request was made only sixteen days after the time limit lapsed and only a day after receiving the questionnaire, and Commerce had not yet expended significant resources in conducting the review. Remand Redetermination at 5-6. In other circumstances, these facts might be enough for Commerce to find it reasonable to accept the withdrawal. Here, however, exceptional circumstances make Commerce's decision to rescind Weihai's review, without taking any other action, not reasonable.

This case is sui generis for several reasons. On remand Commerce was in the unique position of deciding whether or not to rescind the administrative review of Weihai after it had already completed a full individual examination of Weihai. 7 This is significant, in part, because the resulting rate for Weihai was drastically different from that of the single other selected mandatory respondent, Jiangsu.

This difference should have alerted Commerce that using only Jiangsu's rate in calculating the all-others rate was not likely to result in a rate that reflected a properly selected weighted average rate required to be applied to all other non-examined companies. See 19 U.S.C. § 1673d(c)(5). 8 Given the drastic difference between the rates of Jiangsu and Weihai-originally 61.48% and 21.67%, respectively 9 -it was not reasonable for Commerce to rescind the review of Weihai without some other action, such as selecting another mandatory respondent to take its place. See Final Results at 38,674. By rescinding Weihai's review Commerce was left with only a single rate that the record showed was not likely representative of an appropriate antidumping duty all-others rate.

Commerce has a duty to calculate a rate to be applied to non-examined parties that is based on some fair sample or large part of the exporter and producer pool. 19 U.S.C. § 1677f-1(c)(2). Because of the peculiarities of this case, Commerce should have known it likely was not making a representative selection and was rather choosing an unreliable rate. Here, the choice to rescind the review of Weihai paired with the decision to not select a substitute mandatory respondent, in the light of the difference in the rates assessed against Weihai and Jiangsu, was not supported by substantial evidence. 10 See D & L Supply Co. v. U.S. , 113 F.3d 1220 , 1224 (Fed. Cir. 1997) (where circumstances have changed over time, holding that relying "on margins that have been demonstrated to be inaccurate is irrational.").

III. Bosun's Exhaustion of Administrative Remedies

The court is unpersuaded by the failure to exhaust arguments raised by the Government 11 and DSBC. Def. Br. at 16-17; DSMC Br. at 9-11. The relevant statute requires that the court "shall, where appropriate, require the exhaustion of administrative remedies." 28 U.S.C. § 2637 (d). The court concludes that requiring exhaustion in this instance would not have been sensible. Bosun did not have an issue with the selected mandatory respondents, or the resulting all-others rate, until after one of the two mandatory respondent's review was rescinded. To find a failure to exhaust here would require Bosun to predict that a party would object to the inclusion of Weihai after it was already selected as a mandatory respondent; that either Commerce on its own or at the direction of the court would rescind its review; that Commerce would decide not to substitute Weihai with another respondent; and that it would set the all-others rate based solely on Jiangsu's rate. Requiring Bosun to predict that series of events violates basic tenets of notice and fairness.

This case differs from the situation at issue in Boomerang Tube LLC v. United States . 856 F.3d 908 (Fed. Cir. 2017). In that case, plaintiffs were on notice prior to the preliminary determination that the concerned data was submitted to Commerce and they had the ability to object to its potential use. Id. at 913 . Here, in contrast, it was not until after the final results were issued, the issue was appealed and remanded, and Commerce had made its remand redetermination that Bosun was made aware that Commerce would only be utilizing Jiangsu's rate in determining the all-others rate. Bosun would have had to address the issue long before it was ripe or even knowable. Because that is impractical, the court will not require it.

CONCLUSION

For the foregoing reasons, the court concludes Commerce's decision to use only Jiangsu's rate in setting the all-others rate was not supported by substantial evidence. The court sees nothing in the record to support the choice of Jiangsu's rate as an appropriate all-others rate but does not preclude Commerce from choosing it if it has such evidence. Accordingly, the court remands the matter to Commerce to withdraw the rescission of review as to Weihai; 12 choose a suitable substitute mandatory respondent; or use any other record evidence to devise a fair, equitable, and reasonably accurate all-others rate. 13 If Commerce does not reopen the record, it shall file its remand redetermination with the court within 60 days of this date and all other parties shall have 30 days thereafter to file comments on the remand redetermination. If Commerce decides to reopen the record, it shall advise the court of the schedule needed for its redetermination.