Advanced Tech. & Materials Co. v. United States

Citation938 F.Supp.2d 1342
Decision Date11 October 2013
Docket NumberCourt No. 09–00511.,Slip Op. 13–129.
CourtU.S. Court of International Trade
PartiesADVANCED TECHNOLOGY & MATERIALS CO., LTD., Beijing Gang Yan Diamond Products Company, and Gang Yan Diamond Products, Inc., Plaintiffs, Bosun Tools Group Co. Ltd., Plaintiff–Intervenor, v. UNITED STATES, Defendant, and Diamond Sawblades Manufacturers Coalition, Weihai Xiangguang Mechanical Industrial Co., Ltd., and Qingdao Shinhan Diamond Industrial Co., Ltd., Defendant–Intervenors.


Jeffrey S. Neeley, Michael S. Holton and Stephen W. Brophy, Barnes, Richardson & Colburn, of Washington, DC, for the plaintiffs.

Melissa M. Devine, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for the defendant. With her on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of Counsel on the brief was Nathaniel J. Halvorson, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce.

Daniel B. Pickard and Maureen E. Thorson, Wiley Rein, LLP, of Washington, DC, for defendant-intervenor Diamond Sawblades Manufacturers Coalition.


MUSGRAVE, Senior Judge:

Before the court are the second results of remand (“Second Remand Redetermination” or “ RR2 ”) from the U.S. Department of Commerce, International Trade Administration (“Commerce” or “Department”) on the investigation into sales from the People's Republic of China (“PRC”) of diamond sawblades and parts thereof at less than fair value (“LTFV”). See Slip Op. 12–147 (Sep. 30, 2012).1 The Second Remand Redetermination indicates it is conducted “under protest” 2 in determining the AT & M entity 3 ineligible for an antidumping duty rate separate from the PRC-wide rate after Commerce found AT & M did not choose its own management autonomously from the PRC state. RR2 at 20. This redetermination mooted the only other issue remanded for further explanation or reconsideration, i.e., surrogate valuation of 30CrMo steel inputs.

The defendant and the petitioners-plaintiff, Diamond Sawblades Manufacturers Coalition (DSMC) argue for sustaining those results, while the three respondents comprising the collapsed “AT & M entity,” Advanced Technology & Materials, Co., Ltd. (AT & M), BGY, and Gang Yan Diamond Products, Inc., argue for further remand. The Second Remand Redetermination complies with the order of remand and will therefore be sustained.

I. Background

Immediate background is here provided, and familiarity with prior proceedings is presumed. The court previously examined the analysis, statements and conclusions of the First Remand Redetermination in the context of the available information of record and remanded, inter alia, the separate rate redetermination for the AT & M entity. Holding that the redetermination could not be sustained on the bases articulated by Commerce, it appeared to the court that important aspects of the problem had not been considered, and explanations counter to the evidence of record had been offered. See generally885 F.Supp.2d 1343. Those concerns may be reduced to the following: (1) Commerce's interpretation of “autonomy” in the selection-of-management prong of the separate rates test and its regard of the “ownership” of separate rate applicants for that purpose; (2) Commerce's analysis of the three PRC laws and regulations of record; (3) the factual bases for Commerce's analysis of the AT & M entity; and (4) Commerce's articulation of the separate rate test generally, the relationship between de jure and de facto analyses, and specific questions arising therefrom as identified in the court's order. Remanding these concerns for reconsideration and clarification, the court concluded as follows:

As to what that implies for purposes of remand, no opinion is here expressed, except that the court emphasizes it is not here substituting judgment for that of Commerce on these issues or insistingupon application of the separate rates test in a certain way

in contravention of Arkansas v. Oklahoma, 503 U.S. 91, 113, 112 S.Ct. 1046, 117 L.Ed.2d 239 (1992). The court simply seeks to discern the reasonableness of a determination, and the wisdom to do so. If necessary, upon remand Commerce may re-open the administrative record to gather additional information.

885 F.Supp.2d at 1363 (italics added).

II. Second Remand Redetermination

In the Second Remand Redetermination, Commerce's de facto analysis concluded that the AT & M entity did not rebut the presumption of state control and is therefore not eligible for a separate rate. See, e.g., RR2 at 3, n. 8 & 13. Commerce first explained that “CISRI held a majority share in AT & M at the outset of the period of investigation” and “given that CISRI was wholly-owned by SASAC, government control had the potential to pass from SASAC through to the AT & M Entity via CISRI” and thus “the question then must necessarily turn to whether this potential is exercised here.” Id. at 8. Commerce then explained that “CISRI placed four of its senior officials ... on AT & M's board”, that “these four board members were active in the selection of AT & M's management”, and that of “the five AT & M board members that were not CISRI officials, all were nonetheless nominated by CISRI.” Id. at 8–9. Commerce addressed the additional evidence regarding AT & M's and BGY's management, see id., and concluded that “record evidence demonstrates that AT & M did not choose its own management autonomously.” Id. Thus, Commerce determined that the “AT & M Entity is part of the [PRC]-wide entity and does not qualify for a separate rate.” Id. The result of this determination mooted further consideration of the other issue on remand, the surrogate valuation of 30CrMo steel inputs.

III. Discussion
A. Separate Rate Analysis

As prelude, neither DSMC nor AT & M urges further remand based upon Commerce's de jure analysis or its decision that the valuation of steel inputs is moot. Further, Commerce did not make any de facto findings as to two of the four prongs, namely, whether the export prices are set by or subject to approval by a Chinese government agency or whether AT & M has authority to negotiate and sign contracts. See generally Remand Redetermination. As to the prong analyzing whether AT & M retains the proceeds of its export sales and makes independent decisions regarding disposition of profits or financing of losses, Commerce determined that [t]he record holds little evidence as to how interrelated finances between AT & M and CISRI influenced export functions.” Id. at 21. No party contests this finding; the only issue before the court is Commerce's finding on the remaining prong of the de facto analysis that AT & M did not demonstrate autonomy from the PRC government in its selection of management.

As further prelude, there are several interpretive nits to which the Second Remand Redetermination's analysis draws attention, which are aside from its findings. For example, in addition to note 2, supra, Commerce files disagreement with the “rejection” of its First Remand Redetermination “regarding the full effects of the SASAC Interim Regulations (and the weight it should be given) in the broader de jure and de facto analysis, especially with respect to control over export activities, that comprises the Department's separate rate test and the impact of ownership here, and are conducting the remand under protest.” RR2 at 20 n. 47; see infra. The court only stated that the First Remand Redetermination could not be sustained as articulated; it expressed no opinion whatsoever on the “weight” the Interim Regulations should be given in the broader de jure and de facto analysis. With respect to “control over export activities,” the opinion merely drew attention to those provisions that facially appeared to have some bearing on that analysis in order to elicit from Commerce further clarification and/or re-analysis on remand. On remand, Commerce was entirely free to explain any analytical error in the opinion or clarify its own earlier analyses in order to aid the court's understanding.

In addition, under a section entitled Court's Analysis of Ownership” [ sic ] the Second Remand Redetermination states that the court “began its analysis by observing that CISRI's[ ] ownership of AT & M should be considered relevant despite the Department's long-standing practice of finding that corporate form may insulate a company from government control.[ ] RR2 at 3 (italics added, footnotes omitted). That does not quite restate the First Remand Determination's actual statement of that practice; the First Remand Determination stated, in essence, that corporate form, per se, entirely insulates a company from government control, whereas the prior opinion only observed (again) that it is “settled” that government ownership alone is not dispositive of control. See Slip Op. 11–122 (Oct. 12, 2011) at 14, referencing Qingdao Taifa Group Co., Ltd. v. United States, 33 CIT 1090, 1100, 637 F.Supp.2d 1231, 1242 (2009). The opinion then observed that “corporate form in and of itself has never been found to ‘demonstrate’ insulation from governmental control [and been found dispositive on the absence of de jure control], or further de jure proof of the absence thereof in accordance with the separate rate test would serve no purpose.” 885 F.Supp.2d at 1350. That is simply a point of logic, not analysis of ownership. The Second Remand Redetermination seems to disclaim the point, but the redetermination also reflects Commerce's own independent findings notwithstanding, i.e., [i]n response to and consistent with the Court's analysis ... the Department finds that ownership is relevant to the separate rates analysis to the extent that ownership, as well as the degree of ownership, affects de facto control”. RR2 at 3.

The Second Remand Redetermination also states with regard to the PRC Interim Regulations that...

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