CAFC Says Commerce Can't Use Just 1 Respondent in AD Reviews With Many Exporters

The Commerce Department cannot select just one mandatory respondent in an antidumping review where multiple exporters have requested a review, the U.S. Court of Appeals for the Federal Circuit ruled in an Aug. 29 nonprecedential opinion. Reversing the Court of International Trade's finding, judges Pauline Newman, Alvin Schall and Sharon Prost said Commerce's interpretation of the statute finding that it can use only one respondent runs "contrary to the statute's unambiguous language." The judges ruled the agency has not shown it to be otherwise reasonable to calculate the all-others rate based on only one respondent and said the directive to find a weighted average gives no reason why it's reasonable to use only a single rate.

"The courts have allowed Commerce to use a great many short-cuts in calculating dumping margins in multi-respondent cases," John Peterson, counsel for plaintiff-appellant Mayrun Tyre (Hong Kong), told Trade Law Daily. With today's opinion, the court has indicated "that using a single data point to calculate a 'weighted average' is one shortcut too far."

Added Lizbeth Levinson, counsel for appellant Kenda Rubber (China): "We are very pleased with the Court’s opinion. We hope that this results in a long-term change in [Commerce's] policy of relying on only one respondent in administrative reviews. We are hopeful that Commerce will interpret this decision to require it to select a second respondent in this case, which will ultimately result in a more favorable separate rate for our client."

The case concerns the second administrative review of the antidumping duty order on passenger-vehicle and light-truck tires from China. Forty-two exporters originally requested to be reviewed, of which Commerce selected only two of them: Zhaoqing Junhong and Shandong Haohua Tire. Shortly into the review, Haohua withdrew, and the agency didn't replace the respondent. The result was a 64.57% dumping margin for Junhong -- a mark that was then applied to all the other exporters.

At CIT, many companies, led by YC Rubber, took issue with the decision to use only one respondent. The trade court wasn't sympathetic to the exporters' case, ruling it was within Commerce's discretion to pick just one respondent. On appeal, the Federal Circuit three-judge panel overturned the CIT ruling, finding no such discretion exists.

"We conclude that Commerce’s interpretation is contrary to the statute’s unambiguous language," Newman, the author of the decision, said. "The statute calls for all respondents to be individually investigated, unless the large number makes separate review impracticable. This statutory 'exception' authorizes review of a smaller number of exporters or producers than have requested review. 19 U.S.C. § 1677f-1(c)(2). The question is whether the statute permits Commerce to review a single exporter or producer when multiple have requested review and Commerce has not demonstrated that it was otherwise reasonable to calculate the all-others rate based on only one respondent."

The court looked at the criterion for what a "reasonable number" of respondents would be and concluded the law generally requires this number to be greater than one. Looking to whether Congress spoke directly on the issue, Newman said Congress contemplated the possibility of multiple exporters in a review, and AD duties could be found for a reasonable number of exporters that was fewer than the total number. Acknowledging that a plural word -- in this case "respondents" -- can include the singular, the court ruled that since the statute requires Commerce to find the weighted average of the respondents' rates, the agency gave no reason to believe it reasonable to average a single rate.

Peterson believes the ruling could serve as a drag on Commerce's resources given that they seemingly will now have to review more respondents. Levinson, however, believes the ruling will not be a big hit to the agency's resources given that most reviews are already conducted with two respondents. Further, the opinion is listed as "nonprecedential," so Levinson said it will be interesting to see how the agency responds.

The appellants also contested Commerce's use of Thailand as the main surrogate country and the agency's move to disregard Thai import values from India, Indonesia and South Korea. The appellate court said it didn't need to rule on this point, saying such a decision would be "premature, for these fact-dependent situations may vary with the specific circumstances under review." The same is true for the appellants' challenge to Commerce's decision to reject withdrawal requests from many of the respondents.

(YC Rubber, et al. v. United States, Fed. Cir. #21-1489, dated 08/29/22, Judges Pauline Newman, Alvin Schall and Sharon Prost. Attorneys: Nicholas Sparks of Hogan Lovells for plaintiffs-appellants led by YC Rubber; John Peterson of Neville Peterson for plaintiff-appellant Mayrun Tyre (Hong Kong); Lizbeth Levinson of Fox Rothschild for plaintiff-appellant Kenda Rubber (China); Ashley Akers for defendant-appellee U.S. government)