AD Respondent Tells CAFC It Was Not Required to Exhaust Claims Over Surrogate Values at Commerce

Plaintiff-appellants led by Carbon Activated Tianjin were not required to exhaust their arguments against the use of Malaysian import data under Harmonized System subheading 2708.10 to calculate a surrogate value for coal tar because Commerce used data from the subheading for the first time in the antidumping duty review's final results, counsel for Carbon Activated told the U.S. Court of Appeals for the Federal Circuit during March 7 oral arguments (Carbon Activated Tianjin Co. v. United States, Fed. Cir. # 22-1298).

Carbon Activated said Commerce presented its findings in a "confusing" way by saying it was going to value coal tar pitch under HS 2706 but eventually using HS 2708.10. In its opening brief, Carbon Activated said the Court of International Trade's holding on the issue was a "strawman." The trade court ruled against the exporter's claim that it had no chance to present arguments since Carbon Activated's case brief made claims against HS 2708.10 based on the understanding that Commerce used that subheading to value coal tar pitch. Carbon Activated said that Commerce did not use HS 2708.10 "despite saying that it did."

"We were not required to exhaust [the argument] because that heading was not used in the prelims, and it was laid out in a very confusing manner," said Dharmendra Choudhary, counsel for Carbon Activated. "Also, the department changed its practice between prelims and finals ... from 2706, which was consistently being used, to a new heading in the final, 2708.10. And the department gave a very confusing finding. It did not put us on notice. None of the parties briefed this issue. This came up for the first time in the final results, therefore we were never required to exhaust."

Margaret Jantzen of DOJ said the arguments against the surrogate values of coal tar pitch and bituminous coal were not exhausted administratively, but they still should be addressed by the government. "There is nothing on this record" that Carbon Activated has identified to say that the Malaysian data, which has been found to be "reliable," is "not reliable or abberational," Jantzen said. "When Commerce engages in that sort of inquiry there's a benchmarking analysis that it undertakes."

The case stems from the 2017-18 administrative review of the AD duty order on activated carbon from China in which Carbon Activated served as a mandatory respondent. In the review, the agency initially chose Malaysia but used a financial statement from Romanian company Romcarbon to calculate the financial ratios. Commerce held that Romania was not a significant producer of similar merchandise, barring it from serving as the primary surrogate country. The agency changed this position on remand, but ultimately Malaysia was upheld as the primary surrogate even though Commerce used Romcarbon's financial statement to find the financial ratios.

During oral arguments, Judge Leonard Stark noted that this is the 11th administrative review of the order, and some of Commerce's decisions are different from those made in prior review, asking the agency whether it has an obligation to explain why it takes different positions. Jantzen said Commerce only has an obligation to explain different positions if the agency is looking at the same record with the same facts and applying a different methodology with a different conclusion, but there's no claim here that the record here is the same in prior reviews.