CAFC Says Commerce Properly Used Input Data From Non-Primary Surrogate Nation in AD Review

The U.S. Court of Appeals for the Federal Circuit on May 1 upheld the Commerce Department's valuation of an activated carbon input using data from a country different from the primary surrogate country. Judges Todd Hughes, Kara Stoll and Leonard Stark said that just because Commerce departed from what it typically does in preferring to take all the data from the primary surrogate country, this "does not mean that what it did do is unsupported by substantial evidence."

Stark, who wrote the opinion, said that in the 2017-18 administrative review of the antidumping duty order on activated carbon from China, Commerce legally valued bituminous coal with a known calorific value using Malaysian tariff schedule subheading 2701.19 and bituminous coal with an unknown calorific value using Romanian subheading 2701.12. The appellate court further upheld Commerce's pick of Malaysia as the primary surrogate country and ruled that the appellants, led by Carbon Activated Tianjin Co., failed to exhaust arguments against the valuation of coal tar pitch.

In the review, Commerce tapped Malaysia over Romania as the primary surrogate country, though it ultimately used a financial statement from Romanian company Romcarbon to calculate the financial ratios. The agency ultimately found that while Romania was a significant producer of activated carbon, the Malaysian data was more specific. The Court of International Trade upheld the ruling, prompting the appeal from Carbon Activated.

The appellate court sustained the primary surrogate nation pick, finding Malaysia had a tariff subheading specific to coconut-shell charcoal, a direct input, while Romania had only a broader subheading covering wood-based charcoal and nut-based charcoal. Carbon Activated claimed that Romania was the better pick since it had "viable financial data" and Commerce used data from this country for one of the inputs. Stark said there is "no authority requiring Commerce to elevate financial data, or any factor, above all others in choosing a primary surrogate country." Product-specific surrogate values, on the other hand, is something the agency can directly consider.

Carbon Activated also challenged the valuation of bituminous coal with both an unknown and known calorific value. For BT coal with a known calorific value, the appellate court said the appellants needed to show that the Malaysian subheading 2701.19 data was aberrational or unreliable -- something they failed to do. Commerce cited surrogate-value submissions from Calgon Carbon Corp. showing there is no indication the average unit value is unusable due to being aberrantly high or based on a limited number of imports, the court ruled.

As for BT coal with an unknown calorific value, Stark ruled the appellants pointed to "nothing suggesting that 'no reasonable mind' could have come to the same conclusion as Commerce," adding that just because Commerce departed from what it normally does in taking all its data from the primary surrogate country, that does not mean what it did was unsupported by substantial evidence.

(Carbon Activated Tianjin Co. v. U.S., Fed. Cir. # 22-1298, dated 05/01/23; Judges: Todd Hughes, Kara Stoll and Leonard Stark; Attorneys: Dharmendra Choudhary of Grunfeld Desiderio for plaintiffs-appellants led by Carbon Activated Tianjin Co.; Margaret Jantzen for defendant-appellee U.S. government; and Melissa Brewer of Kelley Drye for defendants-appellees led by Calgon Carbon Corp.)