Fine Furniture (Shanghai) Ltd. v. United States

Decision Date31 August 2012
Citation865 F.Supp.2d 1254
PartiesFINE FURNITURE (SHANGHAI) LIMITED, et al., Plaintiffs, and Hunchun Forest Wolf Industry Company Limited, et al., Plaintiff–Intervenors, v. UNITED STATES, Defendant, and The Coalition for American Hardwood Parity, Defendant–Intervenor.
CourtU.S. Court of International Trade

OPINION TEXT STARTS HERE

Kristin H. Mowry, Jeffrey S. Grimson, Jill A. Cramer, Susan L. Brooks, Sarah M. Wyss, and Keith F. Huffman, Mowry & Grimson, PLLC, of Washington, DC, for the Plaintiffs Fine Furniture (Shanghai) Ltd.; Great Wood (Tonghua) Ltd.; and Fine Furniture Plantation (Shishou) Ltd.

Francis J. Sailer, Mark E. Pardo, Andrew T. Schutz, and Kavita Mohan, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of Washington, DC, for the Consolidated Plaintiffs Baroque Timber Industries (Zhongshan) Co., Ltd.; Riverside Plywood Corp.; Samling Elegant Living Trading (Labuan) Ltd.; Samling Global USA, Inc.; Samling Riverside Co., Ltd.; Suzhou Times Flooring Co., Ltd.; Shanghai Eswell Timber Co., Ltd.; Shanghai Lairunde Wood Co., Ltd.; Shanghai New Sihe Wood Co., Ltd.; Shanghai Shenlin Corp.; Vicwood Industry (Suzhou) Co. Ltd.; Xuzhou Shenghe Wood Co., Ltd.; and A & W (Shanghai) Woods Co., Ltd.

Gregory S. Menegaz, J. Kevin Horgan, and John J. Kenkel, deKieffer & Horgan, PLLC, of Washington, DC, for the PlaintiffIntervenors Changzhou Hawd Flooring Co., Ltd.; Dunhua City Jisen Wood Industry Co., Ltd.; Dunhua City Dexin Wood Industry Co., Ltd.; Dalian Huilong Wooden Products Co., Ltd.; Kunshan Yingyi–Nature Wood Industry Co., Ltd.; and Karly Wood Product Ltd.

Jeffrey S. Neeley, Michael S. Holton, and Stephen W. Brophy, Barnes, Richardson & Colburn, of Washington, DC, for PlaintiffIntervenors Hunchun Forest Wolf Industry Co. Ltd.; Dunhua City Dexin Wood Industry Co., Ltd.; Nanjing Minglin Wooden Industry Co., Ltd.; Dalian Penghong Floor Products Co., Ltd.; Dongtai Fuan Universal Dynamics, LLC; Zhejiang Fudeli Timber Industry Co., Ltd.; Dunhua City Jisen Wood Industry Co., Ltd.; Fusong Qianqiu Wooden Product Co., Ltd.; Power Dekor Group Co., Ltd.; Jiafeng Wood (Suzhou) Co., Ltd.; Jiangsu Senmao Bamboo and Wood Industry Co., Ltd.; Shenyang Haobainian Wooden Co., Ltd.; Guangzhou Pan Yu Kang Da Board Co., Ltd.; Nakahiro Jyou Sei Furniture (Dalian) Co., Ltd.; Yixing Lion–King Timber Industry Co., Ltd.; Guangzhou Panyu Southernstar Co., Ltd.; Dalian Kemian Wood Industry Co., Ltd.; Kunshan Yingyi–Nature Wood Industry Co., Ltd.; Fu Lik Timber (HK) Co. Ltd.; Puli Trading Ltd.; Zhejiang Shiyou Timber Co., Ltd.; Shanghai Lizhong Wood Products Co., Ltd.; and Shenzhenshi Huanwei Woods Co. Ltd.

Daniel L. Porter, Matthew P. McCullough, Ross E. Bidlingmaier, and William H. Barringer, Curtis, Mallet–Prevost, Colt & Mosle LLP, of Washington, DC, for the PlaintiffIntervenor the Bureau of Fair Trade for Imports & Exports, Ministry of Commerce, People's Republic of China.

Alexander V. Sverdlov, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for the Defendant United States. With him on the briefs were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of Counsel on the briefs was Jonathan Zielinksi, Senior Attorney, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce.

Jeffrey S. Levin, Levin Trade Law, P.C., of Bethesda, MD, and John B. Totaro, Jr., Neville Peterson, LLP, of Washington, DC, for the DefendantIntervenor the Coalition for American Hardwood Parity.

OPINION AND ORDER

Chief Judge POGUE:

This is a consolidated action seeking review of determinations made by the United States Department of Commerce (“Commerce” or “the Department”) in the countervailing duty (“CVD”) investigation of multilayered wood flooring from the People's Republic of China (“China”).2 Currently before the court is Plaintiffs' Rule 56.2 Motion for Judgment on the Agency Record. In their motion, Plaintiffs challenge three aspects of Commerce's Final Determination: (1) Commerce's use of adverse facts available (“AFA”) in determining the benchmark rate for calculating the benefit Plaintiff Fine Furniture received from the provision of electricity for less than adequate remuneration; (2) Commerce's inclusion of the Basic Electricity Tariff in the calculation of the electricity subsidy rate in the Final Determination without notice and opportunity to comment by respondents; and (3) the inclusion of Shanghai Eswell Enterprise Co., Ltd. and Elegant Living Corporation on the list of non-cooperating companies.

As explained below, the court (1) affirms Commerce's use of AFA in determining the benchmark for provision of electricity at less than adequate remuneration; (2) affirms the inclusion of the Basic Electricity Tariff as a component of the electricity subsidy; and (3) remands the Final Determination to Commerce to reconsider and remove or provide further explanation for including Shanghai Eswell Enterprise Co., Ltd. and Elegant Living Corporation on the list of non-cooperating companies.

The court has jurisdiction pursuant to § 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2006)3 and 28 U.S.C. § 1581(c) (2006).

BACKGROUND 4

This case arises from Commerce's initiation of a countervailing duty investigation of multilayered wood flooring from China, on November 18, 2010, following a petition from DefendantIntervenor the Coalition for American Hardwood Parity (CAHP). See Multilayered Wood Flooring from the People's Republic of China, 75 Fed.Reg. 70,719, 70,719 (Dep't Commerce Nov. 18, 2010) (initiation of countervailing duty investigation). In its investigation, and pursuant to 19 U.S.C. § 1677f–1(c)(2), Commerce limited the mandatory respondents to three companies and their affiliates: (1) Fine Furniture (Shanghai) Ltd., Great Wood (Tonghua) Ltd., and Fine Furniture Plantation (Shishou) Ltd. (collectively Fine Furniture); (2) Zhejiang Layo Wood Industry Co., Ltd. and Jiaxing Brilliant Import & Export Co., Ltd. (collectively “Layo”); and (3) Zhejiang Yuhua Timber Co., Ltd. (“Yuhua”). Respondent Selection Memo, C–570–971, POI 09 (Dec. 30, 2010), Admin. R. Pt. 1 Pub. Doc. 193 at 4; Multilayered Wood Flooring from the People's Republic of China, 76 Fed.Reg. 19,034, 19,038–39 (Dep't Commerce Apr. 6, 2011) (preliminary affirmative countervailing duty determination) (“ Preliminary Determination ”). In the Preliminary Determination, Commerce assigned zero rates to Layo and Yuhua; a 2.25% rate to Fine Furniture; a 2.25% all others rate for cooperating companies; and a 27.01% rate for non-cooperating companies. Preliminary Determination, 76 Fed.Reg. at 19,041–42. Following comments on the Preliminary Determination, Commerce issued the Final Determination on October 18, 2011. Final Determination, 76 Fed.Reg. at 64,313. In the Final Determination, Commerce adjusted subsidy rates as follows: Layo and Yuhua received de minimis rates; Fine Furniture received a 1.50% rate; all other cooperating respondents received a 1.50% rate; and all non-cooperating respondents received a 26.73% rate. Final Determination, 76 Fed.Reg. at 64,315–17.

STANDARD OF REVIEW

“The court shall hold unlawful any determination, finding, or conclusion found ... to be unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).

DISCUSSION

A countervailing duty is imposed on an import whenever Commerce determines that “the government of a country or any public entity within the territory of a country is providing, directly or indirectly, a countervailable subsidy....” 19 U.S.C. § 1671(a).5 To be countervailable, a subsidy must provide a financial contribution to a specific industry, and the respondent must benefit. See19 U.S.C. § 1677(5)(5A); Essar Steel Ltd. v. United States, 34 CIT ––––, 721 F.Supp.2d 1285 (2010).

When investigating whether the statute requires imposition of a countervailing duty order, Commerce often requires both the respondent and the foreign government to submit factual information. Essar Steel, 34 CIT at ––––, 721 F.Supp.2d at 1297 (“Typically, foreign governments are in the best position to provide information regarding the administration of their alleged subsidy programs, including eligible recipients. The respondent companies, on the other hand, will have information pertaining to the existence and amount of the benefit conferred on them by the program.”). In addition, when determining whether or not a subsidy is countervailable, Commerce relies on facts placed on the record by interested parties.

When an interested party has failed to submit necessary information, Commerce may make its determination on the basis of facts otherwise available (“FOA”), and in certain circumstances on the basis of AFA. 19 U.S.C. § 1677e(a)(b).6 Before Commerce may employ FOA, 19 U.S.C. § 1677m(d) provides respondents with an opportunity to remedy or explain deficiencies in their submissions. § 1677e(a); Reiner Brach GmbH & Co. KG v. United States, 26 CIT 549, 555, 206 F.Supp.2d 1323, 1330 (2002) (quoting Mannesmannrohren–Werke AG v. United States, 23 CIT 826, 837–38, 77 F.Supp.2d 1302, 1313 (1999)). In addition, FOA are only appropriate to fill gaps in the record evidence when Commerce must rely on other sources to complete the record. Zhejiang Dunan Hetian Metal Co. v. United States, 652 F.3d 1333, 1346 (Fed.Cir.2011). When Commerce can independently fill in the gaps, without the requested information, FOA and adverse inferences are not appropriate. See id. at 1348;Gerber Food (Yunnan) Co. v. United States, 29 CIT 753, 767–68, 387 F.Supp.2d 1270, 1283 (2005). Nonetheless, if Commerce finds “that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request ... [Commerce] may use an inference that is adverse to the interests of that party in...

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