CIT Suggests Wiggle Room on CAFC's General Requirement of 2 Mandatory Respondents in AD Reviews

The Court of International Trade sustained the Commerce Department's decision to pick a secondary mandatory respondent in an antidumping review despite temporal limits on the selection process. However, Judge Mark Barnett sent back the agency's methodology for picking the respondent due to its failure to explain its removal of Shandong Linglong Tyre Co. from the list of eligible exporters.

In the case, the U.S. Court of Appeals for the Federal Circuit said that Commerce must use more than one respondent where multiple companies request a review (see 2208290026). Barnett addressed this decision, finding it "incomplete" in the present case, given that the agency picked two mandatory respondents but one of them withdrew from participation.

The judge said that the implied question is whether Commerce has an "ongoing obligation to maintain more than one respondent for individual examination after the initial selection?" Barnett found this question to arise due to difficulties balancing the CAFC's "general rule" and the "temporal limitations and applications" of the statutory provisions on respondent selection.

While the CAFC's analysis suggests the answer to the question is "yes," Barnett said that answering this question "in any particular situation will require the agency to balance considerations such as the resources available to it, the speed with which it can identify another respondent, and the agency’s deadlines for completing the segment.”

In this case, Barnett said the answer is "clear," since the agency reasonably said it could examine two respondents. As a result, Commerce's decision to pick a second respondent was lawful, the opinion said.

Contrary to arguments from separate rate respondents, led by YC Rubber Co., the statute doesn't allow for Commerce to pull forward a previous AD rate instead of adding a second respondent. Barnett found that the "passage of time does not detract from Commerce's decision to select a second mandatory respondent." Despite several years passing since the start of the second AD review on passenger vehicle and light truck tires from China, the exporters subject to review "should have been aware of the ongoing litigation, which centered, in no small part, around the selection of a second mandatory respondent."

However, the court remanded Commerce's method for picking the second respondent on remand. While Barnett took no issue with the decisions to limit the selection of mandatory respondents to the companies with suspended entries and look to the firms with the largest overall import volumes, he said the exclusion of Linglong was "glaring." Commerce left the company off its respondent list since it assigned it a separate rate.

The court said that the exclusion of Linglong doesn't address the parties' concerns since "the order in which the second mandatory respondent was selected had consequences for the respondents that refused to participate." In addition, according to a spreadsheet submitted to the court containing the companies' import volumes, Barnett said it appeared that Kenda Rubber (China) Co. should have been picked and that Commerce didn't pick the firm since it "failed to aggregate certain data entries with slightly different names." The issue was remanded so Commerce can further explain its selection methodology.

The separate rate respondents also said their rate shouldn't be based on Zhaoqing Junhong Co.'s "aberrational" AD margin. In dispatching this claim, Barnett relied on the CAFC's holding that there's no "legal authority" requiring Commerce "to evaluate the representativeness of a calculated rate."

On remand, Commerce also said that companies that declined to participate as mandatory respondents are no longer eligible for a separate rate. Barnett said that while Commerce "has the authority to reconsider the separate rate status," it didn't properly do so. The agency's rationale doesn't amount to an "adequate explanation of why these respondents, at this stage of the process, are not eligible for separate rate status."

Commerce's notice to the parties doesn't explain why failure to participate as a mandatory respondent "alters the separate rate analysis or why the questionnaire response was needed to confirm a previously approved separate rate status." The agency failed to say why the lack of complete mandatory respondent submissions rendered Commerce "unable to confirm, clarify, or verify information that it had previously accepted as sufficient to grant separate rate eligibility," Barnett said.

The separate rate companies also said Commerce should have let certain respondents withdraw their requests for review during the remand proceeding. Barnett faulted the agency for failing to address the parties' new comments on remand, though he suggested they could be easily overcome.

The respondents didn't try to provide "suggested alternative forms" in which they might have responded, the court noted. Commerce can say the new arguments and "absence of alternatives" aren't enough to "establish reasonableness given that the parties were (or should have been) aware of the ongoing and unsettled nature of this administrative review," the brief said.

Jordan Kahn, counsel for YC Rubber and exporter Sutong Tire Resources, said in an email that the companies "are pleased that the CIT invalidated Commerce’s remand redetermination in a number of respects, and hope to achieve an amicable resolution in this appeal that was filed more than five years ago.”

(YC Rubber Co. (North America) v. United States, Slip Op. 24-74, CIT # 19-00069, dated 06/18/24, Judge: Mark Barnett; Attorneys: Jordan Kahn of Grunfeld Desiderio for plaintiffs YC Rubber and Sutong Tire; Patrick Klein of Neville Peterson for consolidated plaintiff Mayrun Tyre (Hong Kong); Jonathan Stoel of Hogan Lovells for plaintiff ITG Voma Corp.; Lizbeth Levinson of Fox Rothschild for plaintiff-intervenor Kenda Rubber (China) Co.; Ashley Akers for defendant U.S. government)