Bio-Lab, Inc. v. United States
| Decision Date | 18 December 2020 |
| Docket Number | Court No. 19-00158,Slip Op. 20–179 |
| Citation | 487 F.Supp.3d 1291 |
| 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 |
James R. Cannon, Jr. and Ulrika K. Swanson, Cassidy Levy Kent (USA) LLP, of Washington, DC, argued for Plaintiffs.
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 McCarthy, Assistant Director. Of counsel on the brief was Daniel J. Calhoun, Assistant Chief Counsel, Office of the Chief Counsel for Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.
Gregory S. Menegaz and Alexandra H. Salzman, deKieffer & Horgan, PLLC, of Washington, DC, argued for Defendant-Intervenors. With them on the brief was J. Kevin Horgan.
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 , 84 Fed. Reg. 37,627 (Dep't Commerce Aug. 1, 2019) ("Final Results"), and the accompanying Issues and Decision Mem. (July 12, 2019), P.R. 74 ("Final IDM"); see also Chlorinated Isocyanurates From the People's Rep. of China , 79 Fed. Reg. 67,424 (Dep't Commerce Nov. 13, 2014) ("Order").
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 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 ("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. See 19 U.S.C. § 1677e(a), (b) (2012) ; Final IDM at 5-6.
It is worth noting that, while the Department found that the respondents benefitted from the Export Buyer's Credit Program, based on AFA, the only evidence on the record regarding its use is that the respondents' U.S. customers did not use the program. See Kangtai's Sec. III Quest. Resp. – Part II (Apr. 2, 2018), C.R. 10-12, Ex. 15; Heze's Sec. III Quest. Resp. – Part II (Apr. 2, 2018), C.R. 3-7, Ex. 13.
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).4 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 31. This 0.87 percent 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 31; see also 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").
As in their challenges to prior reviews of the Order,5 here, 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" China to cooperate with Commerce's requests for information in the future. See Pls.' Reply Br. Supp. Mot. J. Admin. R., ECF No. 34, 6 ( ). Thus, for Plaintiffs, the rate fails to satisfy the purpose of the AFA statute and, therefore, is contrary to law. See Pls.' Mem. Supp. Mot. J. Admin. R., ECF No. 25-1, 3 ( ); see also 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. 4. Therefore, 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 purposes of applying adverse inferences pursuant to the statute." Pls.' Br. 21.
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. 32 ("Def.'s Br."); see also Def.-Ints.' Resp., ECF No. 33.
Jurisdiction is found under 28 U.S.C. § 1581(c) (2012). As this Court held on a similar record in Bio-Lab, Inc. v. United States , 44 CIT ––––, 435 F. Supp. 3d 1361 (2020), 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.
In January 2018, at the request of Plaintiffs and Defendant-Intervenors, the Department commenced the third administrative review of the Order. See Initiation of Antidumping and Countervailing Duty Admin. Reviews , 83 Fed. Reg. 1329 (Dep't Commerce Jan. 11, 2018). The period of review was January 1, 2016, through December 31, 2016. See Final IDM at 1. As in the second administrative review, Kangtai and Heze, Chinese producers and exporters of the subject chemicals, were selected as the mandatory respondents.
Between February and October 2018, Commerce sent questionnaires to China,6 as well as to Kangtai and Heze. The Department asked 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. for Third Admin. Rev. (Feb. 15, 2018), P.R. 8.
Between April and November 2018, 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. – Part II at 14-15; Heze's Sec. III Quest. Resp. – Part II at 14-16. Consistent with its responses to questionnaires issued in the second administrative review, however, 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 Quest. Resp. (Apr. 5, 2018), P.R. 25-28 at 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 Initial Quest. Resp. at 25.
On December 7, 2018, the preliminary results of the administrative review were published. See Chlorinated Isocyanurates From the People's Rep. of China , 83 Fed. Reg. 63,159 (Dep't Commerce Dec. 7, 2018) ("Preliminary Results"), and accompanying Preliminary Decision Mem. (Nov. 30, 2018), P.R. 53 ( ). Commerce preliminarily determined that 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 11-12. 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 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; see also 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) ; see also Final IDM at 30-31. The selected rate—0.87 percent—was included in Commerce's calculation of preliminary individual countervailable subsidy rates for Kangtai and Heze. See Preliminary...
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