CIT Judge Eaton Skeptical of Commerce's Surrogate Labor Rate Calculation at Oral Argument

Court of International Trade Judge Richard Eaton expressed skepticism over the Commerce Department's assumption of 24 working days per month for calculating the surrogate labor rate in an antidumping duty case, during a Feb. 8 oral argument. The Department of Justice backed the use of the 24 working days standard, arguing that it is agency practice to use this number. Since counsel for Commerce at the oral argument could not provide a reason that the 24 working days standard exists, as opposed to a 19 or 20 working day alternative floated by the plaintiff, Eaton said that it should be easy to part with past agency practice as it wasn't an explained action (American Manufacturers of Multilayered Wood Flooring v. United States, CIT #20-03948).

The case, brought by the American Manufacturers of Multilayered Wood Flooring, concerns the administrative review of the antidumping duty order on multilayered wood flooring from China. In the review, Commerce shifted the reported average monthly wage rate to an hourly wage rate on the assumption that there were 24 working days at eight working hours per day when calculating the surrogate labor rate. The result came out to 192 working hours a month or 2,304 working hours a year.

AMMWF took issue, arguing that this was an inflated metric and that the actual number of hours worked in a month was lower once holidays and time off were taken into account. AMMWF's preferred numbers, based on the average annual working hours for OECD countries, were 1,374 annual working hours at 19 or 20 working days per month. Commerce disagreed, saying that the use of 24 working days is agency practice. However, Eaton called this practice out at oral argument after counsel for Commerce, led by Sonia Orfield, could not provide a reason for the 24-day standard.

Orfield argued that there was a high bar to departing from Commerce practice when it came to using the 24-day standard. "Well, maybe," Eaton responded. "Maybe if the policy was never explained in the first place, it's not really a policy. ... If you can't answer the question why there are 24 days, then I don't think there's much of a bar to departing from department policy in the first place." Orfield then echoed her defense of the policy in the name of continuing agency practice.

"I'll just say it again, if it was never a real policy in the first place, then there's no bar to leaving the policy," Eaton said. "An unexplained practice is not a practice. The practice doesn't result merely from use. The practice must be explained." Eaton ended the exchange with a promise to take a further look at DOJ's cited authority for the 24-day policy, which is the source for the standard.

The day was not all roses for the plaintiff, however, as Eaton pushed back against its argument for a different classification of the surrogate glue value in the dumping calculation. AMMWF is vying for a different Harmonized Tariff Schedule subheading for the glue input in the surrogate value calculation, while Commerce is arguing that its selected subheading is more specific and thus better for use in this regard. Eaton said that he didn't think AMMWF's argument will "carry the day." Counsel for AMMWF responded by saying that while Commerce's subheading is more specific, it is not more specific to the input at issue here and should be rejected.