Haixing Jingmei Chem. Prods. Sales Co. v. United States, Slip Op. 18–40

• Decision Date: 10 April 2018
• Docket Number: Court No. 17–00084,Slip Op. 18–40
• Parties: HAIXING JINGMEI CHEMICAL PRODUCTS SALES CO., LTD., Plaintiff, v. UNITED STATES, Defendant, and Arch Chemicals, Inc., Defendant–intervenor.
• Court: U.S. Court of International Trade

308 F.Supp.3d 1366

HAIXING JINGMEI CHEMICAL PRODUCTS SALES CO., LTD., Plaintiff,

v.UNITED STATES, Defendant,andArch Chemicals, Inc., Defendant–intervenor.

Slip Op. 18–40

Court No. 17–00084

United States Court of International Trade.

April 10, 2018

Gregory S. Menegaz, J. Kevin Horgan, Judith L. Holdsworth, and Alexandra H. Salzman, deKieffer & Horgan, PLLC, of Washington, DC, for Plaintiff.

Joshua E. Kurland, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant. With him on the brief were Chad A. Readler, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Assistant Director, and Courtney D. Enlow, Trial Attorney. Of counsel on the brief was Jessica DiPietro, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.

Peggy A. Clarke, Law Offices of Peggy A. Clarke, of Washington, DC, for Defendant–Intervenor.

OPINION AND ORDER

Barnett, Judge:

Plaintiff, Haixing Jingmei Chemical Products Sales Co., Ltd. ("Plaintiff" or "Jingmei") challenges the Department of Commerce's ("Commerce" or "the agency") final decision to rescind the new shipper review of the countervailing duty order on calcium

hypochlorite from the People's Republic of China ("PRC"). See

Calcium Hypochlorite from the People's Republic of China , 82 Fed. Reg. 15,494 (Dep't Commerce Mar. 29, 2017) (final decision to rescind the countervailing duty new shipper review of Haixing Jingmei Chemical Products Sales Co., Ltd.) ("Final Rescission "), ECF No. 18–2, and accompanying Issues and Decision Mem., C–570–009 (Mar. 23, 2017) ("I & D Mem."), ECF No. 18–3.¹ Plaintiff argues that the agency's decision to rescind Plaintiff's new shipper review due to insufficient information to conduct a bona fide analysis of Plaintiff's sale during the period of review ("POR") is unsupported by substantial evidence and not in accordance with law. See Confidential Pl. Haixing Jingmei Chemical Products Sales Co., Ltd. Mem. in Supp. of Mot. for J. on the Agency R. ("Pl.'s Br.") at 1, 12–29, ECF No. 23; Pl. Haixing Jingmei Chemical Products Sales Co., Ltd. Reply Br. ("Pl.'s Reply") at 6–12, ECF No. 32. Plaintiff further contends that the agency's decision to rescind the new shipper review for the reasons it stated amounts to an adverse inference against Jingmei, a cooperating party. Pl.'s Br. at 35–36. Defendant United States ("Defendant" or the "Government") and Defendant–Intervenor Arch Chemicals, Inc. ("Arch Chemicals") support the agency's decision. See Confidential Def–Int. Arch Chemicals, Inc. Br. in Resp. to Pl.'s Mot. for J. on the Agency R. ("Def.–Int.'s Resp."), ECF No. 25; Confidential Def.'s Mem. in Opp'n to Pl.'s Mot. for J. Upon the Agency R. ("Def.'s Resp."), ECF No. 28. For the reasons discussed below, the court finds that Commerce's decision is not supported by substantial evidence, and remands this matter for the agency to redetermine, consistent with this opinion, whether Plaintiff's sale subject to the new shipper review was bona fide .

I. BACKGROUND

On January 30, 2015, Commerce published a countervailing duty order on calcium

hypochlorite from the PRC establishing a countervailing duty rate of 65.85 percent for exporters and producers not individually investigated. Calcium Hypochlorite from the People's Republic of China , 80 Fed. Reg. 5,082, 5,083 (Dep't Commerce Jan. 30, 2015) (countervailing duty order) ("CVD Order "). On November 20, 2015, Plaintiff, a Chinese exporter of calcium hypochlorite, and the affiliated producer of its subject merchandise, Haixing Eno Chemical Co., Ltd. ("Eno"), filed a request for new shipper review. See Entry of Appearance and Request for New Shipper Review (Nov. 20, 2015) ("NSR Request") at 1–2, CJA 4, CR 1, PJA 4, PR 1, ECF No. 33. In response, Commerce initiated a review of the CVD order with respect to Jingmei and Eno. See

Calcium Hypochlorite from the People's Republic of China , 81 Fed. Reg. 11,516 (Dep't Commerce Mar. 4, 2016) (initiation of countervailing duty new shipper review; 2014–2015) (" Initiation ").

The POR was May 27, 2014, through December 31, 2015. Id. at 11,516. Jingmei and Eno had only one reviewable sale to the United States during the POR. Prelim. Mem. on Bona Fide Nature of the Sale in the Countervailing Duty New Shipper Review of Calcium

Hypochlorite from the People's Republic of China (Dec. 27, 2016) ("Prelim. Bona Fide Mem.") at 2, CJA 3, CR 35, PJA 3, PR 51, ECF No. 33.² Between March 4, 2016 and October 28, 2016, Commerce sent questionnaires to Jingmei, Eno, Company X,³ and Company Y seeking information relevant to the list of factors Commerce uses to determine whether a sale subject to new shipper review is bona fide . See infra Part III; Final I & D Mem. at 13 & n.96.⁴ On January 3, 2017, Commerce published its preliminary intent to rescind the new shipper review because it "requested but [was] not provided sufficient information to determine whether, and conclude that, Jingmei's sale of subject merchandise to the United States was bona fide ." Calcium Hypochlorite from the People's Republic of China , 82 Fed. Reg. 83 (Dep't Commerce Jan. 3, 2017) (preliminary intent to rescind the new shipper review of Haixing Jingmei Chemical Products Sales Co., Ltd.). Commerce preliminarily found that it was unable to fully analyze whether Jingmei's sale was bona fide pursuant to 19 U.S.C § 751(a)(2)(B)(iv) because "parties to the NSR repeatedly refused to provide sufficient information" that Commerce deemed necessary to conduct that analysis. Prelim. Bona Fide Mem. at 1. Following case and rebuttal briefs by Jingmei and Arch Chemicals, Commerce issued its final decision to rescind the review for the asserted reason that it had insufficient information to conduct a bona fide analysis of the sale under review. See Final Rescission , 82 Fed. Reg. at 15,495 ("Based on our analysis of the comments received, we make no changes to the preliminary intent to rescind."); see also I & D Mem.

II. JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to § 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012),⁵ and 28 U.S.C. § 1581(c) (2012). The court will uphold an agency's determination that is supported by substantial evidence on the record and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i).

III. ANALYSIS

Pursuant to 19 U.S.C. § 1675(a)(2)(B)(i), if Commerce receives a request from a new exporter or producer that did not export merchandise subject to a countervailing duty order to the United States during the period of investigation, and it is not affiliated with any exporter or producer that did export, Commerce must conduct a review to establish an individual countervailing duty rate for that exporter or producer. 19 U.S.C. § 1675(a)(2)(B)(i) (2016).⁶ In addition, Commerce's regulation requires that the exporter or producer must have "exported, or sold for export, subject merchandise to the United States." 19 C.F.R. § 351.214(b)(1). "The purpose of a new shipper review is to provide an opportunity to an exporter or producer who may be entitled to an individual [countervailing duty] rate, but was not active during the investigation, to be considered for such a rate." Marvin Furniture (Shanghai) v. United States , 36 CIT ––––, ––––, 867 F.Supp.2d 1302, 1307 (2012). The statute requires Commerce to determine an individual countervailing duty rate for a new exporter or producer "based solely on the bona fide [U.S.] sales" of that exporter or producer during the period of review. 19 U.S.C.1675(a)(2)(B)(iv). In determining whether U.S. sales are bona fide , Commerce

shall consider, depending on the circumstances surrounding such sales—

(I) the prices of such sales; (II) whether such sales were made in commercial quantities; (III) the timing of such sales; (IV) the expenses arising from such sales; (V) whether the subject merchandise involved in such sales was resold in the United States at a profit; (VI) whether such sales were made on an arms-length basis; and (VII) any other factor the administering authority determines to be relevant as to whether such sales are, or are not, likely to be typical of those the exporter or producer will make after completion of the review.

19 U.S.C. § 1675(a)(2)(B)(iv).⁷

The regulations provide the circumstances under which Commerce may rescind a review. See 19 U.S.C. § 351.214(f). Commerce may rescind a review if it concludes that two conditions have been met: (1) "there has not been an entry and sale to an unaffiliated customer in the United States of subject merchandise" during the period of review, and (2) that "an expansion of the normal period of review to include an entry and sale to an unaffiliated customer in the United States of subject merchandise would be likely to prevent the completion of the review within the [required] time limits." 19 C.F.R. § 351.214(f)(2). Although the regulation addressing rescission of a new shipper review does not mention a bona fide requirement, "Commerce interprets the term 'sale' in [ 19 C.F.R.] § 351.214(f)(2)(i) to mean that a transaction it determines not to be a bona fide sale is, for purposes of the regulation, not a sale at all." Shijiazhuang Goodman Trading Co. v. United States , 40 CIT ––––, ––––, 172 F.Supp.3d 1363, 1373 (2016). Thus, it follows that when Commerce determines that the sale subject to new shipper review is not bona fide , it may rescind the review.

It is undisputed that Plaintiff met the statutory and regulatory requirements for initiation of the new shipper review. In its notice of initiation, Commerce stated that "[p]ursuant to [ 19 U.S.C. § 1675 ](a)(2)(B) ...[and] 19 CFR 351.214(b)," the NSR Request "meets the threshold requirements for initiation of the [new shipper review] for shipments of calcium

hypochlorite from the PRC produced by Eno Chemical and exported by...