CAFC Sustains Legality of Commerce's Non-Market Economy Policy in AD Proceedings

Bryson, writing for the court, said that the policy, under which Commerce may assign an NME-wide AD rate to a cooperative mandatory respondent that has failed to rebut the presumption of foreign state control, is properly characterized as an evidentiary presumption. The judge noted that evidentiary presumptions, such as the NME policy, are reviewed for their "rationality," ultimately finding that there's a "sound and rational connection between a finding that a country is an NME country and the inference that exporters in that country are subject to government control."

The present case stems from the 2015-16 administrative review of the AD order on multilayered wood flooring from China in which cooperative mandatory respondent Jilin Forest Industry Jinqiao Flooring Group was hit with the 25.62% China-wide rate after failing to rebut the presumption of Chinese government control. The Court of International Trade twice remanded the result on the ground that the NME policy was on unstable legal footing (see 2302090073).

The trade court said the statutory language requires the individual calculation of a mandatory respondent's rate, and that nothing exempts the agency from the duty to find a margin for Jilin using its own data, despite the agency's NME practice.

The Federal Circuit reversed the trade court's ruling, finding that the court is bound by a long string of decisions upholding the NME policy. Also, while the agency hadn't codified the policy in its regulations at the time of the review, the court noted that Commerce has since done just that in 19 C.F.R. Section 351.108(a). The version of this regulation that was in effect at the time of the challenged review, though, said AD rates from NME nations "may consist of a single dumping margin applicable to all exporters and producers."

The court discussed its precedential decisions on the policy, which began with Sigma Corp. v. U.S. In Sigma, the court said Commerce "has broad authority to interpret" the AD statute, including the ability to employ a presumption of state control for exporters in an NME nation and to "place the burden on the exporters to demonstrate an absence of central government control." Since that decision, CAFC said it has "consistently approved of Commerce’s practice of applying the NME presumption."

The practice was emphasized in China Manufacturers Alliance v. U.S., in which the court upheld Commerce's assignment of the China-wide rate to exporter Double Coin -- a "cooperative mandatory respondent that failed to rebut the NME presumption in an administrative review." In that decision, the court said that where a respondent in an NME nation cooperates with the proceeding but fails to rebut the presumption of foreign state control, Commerce can use the country-wide rate, even if that rate is based in whole or in part on an adverse facts available rate.

Jilin argued that all decisions on the NME policy never grappled with whether the policy is allowed "in the absence of a statute or regulation." The court said Jilin's argument in the use of China Manufacturers Alliance "reads out the court's analysis of the statutory and regulatory support for the NME policy to avoid its clear import in this case." In China Manufacturers Alliance, the court "squarely" held that 19 C.F.R. Section 351.107 provides "clear authority" for assigning a single rate to all exporters that qualify for that rate and that 19 U.S.C. Section 1673d(c)(1)(B)(i)(I) allows the country-wide rate to be an individually investigated rate.

As a result, China Manufacturers Alliance and the "long line of cases" that decision relied on "are binding precedent that Jilin may not avoid unless or until the court sits en banc," the court said.

Bryson then turned to whether Commerce could apply the policy without notice-and-comment rulemaking. The court first clarified that the Administrative Procedure Act only requires notice-and-comment rulemaking for "legislative rules (i.e. rules made pursuant to congressionally-delegated authority)." The court said Jilin "merely assumes the NME presumption is a legislative rule," holding that the exporter "provides no authority or explanation as to why an evidentiary presumption, a shorthand for adopting a factual inference, qualifies as a legislative rule."

Instead, the court said the policy is merely an evidentiary presumption that "turns on its rationality." Bryson held that the policy is rational, noting that two of the factors Commerce considers in determining whether a country is an NME country are "the extent of government ownership or control of the means of production" and "the extent of government control over the allocation of resources and over the price and output decisions of enterprises."

The court said that logically, "greater government control over the means of production or the allocation of resources would lead to the conclusion that a country’s economy does not operate on market principles." As a result, once a country has been deemed an NME nation, there's "nothing unreasonable about presuming that exporters in that country are subject to government control, unless proved otherwise in each individual case."

(Jilin Forest Industry Jinqiao Flooring Group v. United States, Fed. Cir. # 23-2245, dated 07/28/25; Judges: Todd Hughes, William Bryson and Leonard Stark; Attorneys: Brittney Powell of Fox Rothschild for plaintiff-appellee Jilin Forest Industry Jinqiao Flooring Group; Brendan Jordan for defendant-appellant U.S. government)