Bio-Lab, Inc. v. United States

• Citation: 435 F.Supp.3d 1361
• Decision Date: 07 April 2020
• Docket Number: Court No. 18-00155,Slip Op. 20–45
• Parties: BIO-LAB, INC., Clearon Corp. and Occidental Chemical Corp., Plaintiffs, v. UNITED STATES, Defendant, and Juancheng Kangtai Chemical Co., Ltd. and Heze Huayi Chemical Co., Ltd., Defendant-Intervenors.
• Court: U.S. Court of International Trade

435 F.Supp.3d 1361

BIO-LAB, INC., Clearon Corp. and Occidental Chemical Corp., Plaintiffs,

v.UNITED STATES, Defendant,andJuancheng Kangtai Chemical Co., Ltd. and Heze Huayi Chemical Co., Ltd., Defendant-Intervenors.

Slip Op. 20–45

Court No. 18-00155

United States Court of International Trade.

April 7, 2020

James R. Cannon, Jr., Cassidy Levy Kent (USA) LLP, of Washington, DC, argued for Plaintiffs. With him on the brief was Ulrika K. Swanson.

Sonia M. Orfield, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for Defendant. With her on the brief were Joseph H. Hunt, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Catherine Miller, Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, DC.

Gregory S. Menegaz, deKieffer & Horgan, PLLC, of Washington, DC, argued for Defendant-Intervenors. With him on the brief were J. Kevin Horgan and Alexandra H. Salzman.

OPINION

Eaton, Judge:

Bio-Lab, Inc., Clearon Corp., and Occidental Chemical Corp. ("Plaintiffs") are U.S. domestic producers of chlorinated isocyanurates¹ and the petitioners in this proceeding. They challenge the United States Department of Commerce’s ("Commerce" or the "Department") final results published in Chlorinated Isocyanurates From the People’s Republic of China , 83 Fed. Reg. 26,954 (Dep't Commerce June 11, 2018) ("Final Results"), and the accompanying Issues and Decision Mem. (June 5, 2018), P.R. 72 ("Final IDM").

In the Final Results, Commerce determined that Defendant-Intervenors and mandatory respondents Juancheng Kangtai Chemical Co., Ltd. ("Kangtai") and Heze Huayi Chemical Co., Ltd. ("Heze"), Chinese producers and exporters of the chemicals, received countervailable subsidies during the period of review, including through a loan program called the Export Buyer’s Credit Program.² See Final IDM at 1. It made this determination on the basis of adverse inferences, having found that the use of adverse facts available ("AFA")³ was warranted because the Government of China (1) failed to provide necessary information about the operation of the Export Buyer’s Credit Program, and (2) failed to act to the best of its ability to cooperate with Commerce’s requests for information about the program.⁴ See 19 U.S.C. § 1677e(a), (b) ; Final IDM at 5-6. To determine an AFA rate for the Export Buyer’s Credit Program, Commerce used a hierarchy it developed for administrative reviews. See 19 U.S.C. § 1677e(d).⁵ Applying step two of the hierarchy, the Department selected the rate of 0.87 percent ad valorem as a component of the final subsidy rate calculated for Kangtai and Heze. See Final IDM at 12. This rate had previously been determined in an earlier segment of the same proceeding for a Chinese government loan program called the Export Seller’s Credit Program. Commerce found the Export Seller’s Credit Program to be "similar" to the Export Buyer’s Credit Program because each conferred a similar benefit: access to government-subsidized loans. See Final IDM at 12; 19 U.S.C. § 1677e(d)(1)(A)(i) (emphasis added) (permitting Commerce to "use a countervailable subsidy rate applied for the same or similar program in a countervailing duty proceeding involving the same country").

Quite naturally, Plaintiffs do not question Commerce’s finding that the use of AFA was warranted. Nor do Plaintiffs dispute the lawfulness of the hierarchy that Commerce used to select an AFA rate for the Export Buyer’s Credit Program. Rather, they argue that the hierarchy, as applied here, resulted in a rate for the program that is "simply too low to induce" the Government of China to cooperate with Commerce’s requests for information in the future. See Pls.’ Reply Br. Supp. Mot. J. Admin. R., ECF No. 37, 6; Pls.’ Mem. Supp. Mot. J. Admin. R., ECF No. 26-1 ("Pls.’ Br.") 3. Thus, for Plaintiffs, the rate fails to satisfy the purpose of the AFA statute and, therefore, is contrary to law. See Pls.’ Br. 3; 19 U.S.C. § 1677e(b). In addition, Plaintiffs claim that substantial record evidence does not support the finding that the Export Buyer’s Credit Program and the Export Seller’s Credit Program are "similar." See Pls.’ Br. 3. As a result, they ask the court to "remand [this case] to [Commerce] with instructions to reconsider [these] issues and address specifically the rationale for relying on a 0.87 percent subsidy rate rather than a higher rate and the reasons for finding that Export Buyer’s Credits and Export Seller’s Credits are ‘similar’ for purpose of applying adverse inferences pursuant to the statute." Pls.’ Br. 20.

For their part, Defendant the United States ("Defendant"), on behalf of Commerce, and Defendant-Intervenors Kangtai and Heze ask the court to sustain the Final Results. See Def.’s Resp. Pls.’ Mot. J. Agency R., ECF No. 34 ("Def.’s Br."); see also Def.-Ints.’ Resp., ECF No. 33.

Jurisdiction is found under 28 U.S.C. § 1581(c) (2012). Because Commerce’s selection of 0.87 percent as the AFA rate for the Export Buyer’s Credit Program is supported by substantial evidence and otherwise in accordance with law, the Final Results are sustained.

BACKGROUND

I. The Administrative Review

In January 2017, at the request of Plaintiffs and Defendant-Intervenors, the Department commenced the second administrative review of the countervailing duty order on chlorinated isocyanurates from China. See Initiation of Antidumping and Countervailing Duty Admin. Reviews , 82 Fed. Reg. 4294 (Dep't Commerce Jan. 13, 2017) ; see also Chlorinated Isocyanurates From the People’s Rep. of China , 79 Fed. Reg. 67,424 (Dep't Commerce Nov. 13, 2014) (countervailing duty order). The period of review was January 1, 2015, through December 31, 2015. See Final IDM at 1. Three Chinese producers and exporters of the subject chemicals were selected as mandatory respondents, including Kangtai and Heze.⁶

Between February and September 2017, Commerce sent questionnaires to the Government of China, as well as to Kangtai and Heze. The Department asked the Government of China to provide information about, among other things, the operation of the Export Buyer’s Credit Program—a government loan program administered by the state-owned China Export Import Bank. From Kangtai and Heze, the Department sought information about their U.S. customers’ use of the program during the period of review. See Countervailing Duty Quest. (Feb. 27, 2017), P.R. 11.

Between April and October 2017, Commerce received timely responses to its questionnaires. Kangtai and Heze provided the information that Commerce asked for, including evidence that their U.S. customers did not obtain financing through the Export Buyer’s Credit Program. See Kangtai’s Sec. III Quest. Resp. (Apr. 12, 2017), Ex. 15, C.R. 15; Heze’s Sec. III Quest. Resp. (Apr. 12, 2017), Ex. 12, C.R. 7. The Government of China, however, did not. Specifically, the Government of China responded that some of the information that the Department sought about the operation of the Export Buyer’s Credit Program was "not applicable," because the mandatory respondents’ U.S. customers did not use the program. See China’s Initial CVD Quest. Resp. (Apr. 12, 2017), P.R. 21-24. In addition, China asserted that it was "unable" to provide the requested information, not because it did not have it, but because, in its view, the information was "not necessary" to Commerce’s determination. See China’s Second Suppl. CVD Quest. Resp. (Oct. 2, 2017), P.R. 45.

II. Preliminary Results

On December 4, 2017, the preliminary results of the administrative review were published. See Chlorinated Isocyanurates From the People’s Rep. of China , 82 Fed. Reg. 57,209 (Dep't Commerce Dec. 4, 2017) ("Preliminary Results"), and accompanying Preliminary Decision Mem. (Nov. 27, 2017), P.R. 49 ("Prelim. Dec. Mem."). Commerce preliminarily determined that the Government of China failed to cooperate with its requests for information. In particular, Commerce found that China’s questionnaire responses failed to provide necessary information regarding, inter alia : (1) whether the China Export Import Bank uses third-party banks to disburse or settle Export Buyer’s Credits, (2) the interest rates it used during the period of review, and (3) whether, after the program was amended in 2013, the China Export Import Bank limited the provision of Export Buyer’s Credits to business contracts exceeding $2 million. See Prelim. Dec. Mem. at 12. Finding that it could not fully analyze the operation of the program without this information, the Department concluded that necessary information was missing from the record, and that the use of facts available was warranted. See 19 U.S.C. § 1677e(a).

Commerce also found that the Government of China had failed to act to the best of its ability to cooperate with its information requests, and used the adverse inference that, during the period of review, Kangtai and Heze received a countervailable benefit under the Export Buyer’s Credit Program. See Prelim. Dec. Mem. at 12; 19 U.S.C. § 1677e(b).

Having found that Kangtai and Heze used and benefitted⁷ from the Export Buyer’s Credit Program, Commerce determined an AFA rate for the program using a hierarchical approach. See 19 U.S.C. § 1677e(d) ; Final IDM at 5. The selected rate—0.87 percent—was included in Commerce’s calculation of preliminary individual countervailable subsidy rates for Kangtai and Heze. See Preliminary Results, 82 Fed. Reg. at 57,210.

III. Final Results

On June 5, 2018, Commerce issued its Final IDM and found, as it had in the Preliminary Results, that Kangtai and Heze received countervailable subsidies at 0.87 percent ad valorem under the Export Buyer’s Credit Program.⁸ See Final IDM at 11 ("As AFA, we determine that [the Export Buyer’s Credit Program] provides a financial contribution, is specific, and provides a benefit to the company respondents...