Heze Huayi Chem. Co. v. United States
| Decision Date | 05 August 2021 |
| Docket Number | Slip Op. 21-97,Court No. 20-00058 |
| Citation | 532 F.Supp.3d 1301 |
| Parties | HEZE HUAYI CHEMICAL CO., LTD. and Juancheng Kangtai Chemical Co., Ltd., Plaintiffs, v. UNITED STATES, Defendant, Bio-Lab, Inc., Clearon Corp. and Occidental Chemical Corporation, Defendant-Intervenors. |
| Court | U.S. Court of International Trade |
Gregory S. Menegaz, deKieffer & Horgan PLLC, of Washington, DC, argued for plaintiffs Heze Huayi Chemical Co. and Juancheng Kangtai Chemical Co. With him on the brief were Alexandra H. Salzman and James K. Horgan.
Sonia M. Orfield, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for the defendant United States. Of counsel on the brief was Jesus N. Saenz, Attorney, Office of Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, DC.
James R. Cannon, Jr., Cassidy Levy Kent (USA) LLP, of Washington, DC, argued for defendant-intervenors Bio-Lab, Inc., Clearon Corporation and Occidental Chemical Corporation. With him on the brief were Jonathan M. Zielinski and Ulrika Kristin Skitarelic Swanson.
This action arises from a challenge by plaintiffs, Heze Huayi Chemical Co., Ltd. ("Heze Huayi") and Juancheng Kangtai Chemical Co., Ltd. ("Kangtai," and, collectively, "plaintiffs") to certain aspects of the final results of an administrative review of the antidumping duty order covering chlorinated isocyanurates ("chlorinated isos") published by the Department of Commerce ("Commerce") in the Federal Register on June 20, 2016.1 See Chlorinated Isocyanurates from the People's Republic of China , 85 Fed. Reg. 10,411 (Dep't Commerce Feb. 24, 2020) (final results) ("Final Determination"), and accompanying Issues and Decision Memorandum ("IDM"). As a result, plaintiffs were assigned an assessment deposit rate of 116.83 percent for Heze Huayi and 76.63 percent for Kangtai. See Final Determination.
Plaintiffs filed a motion for judgment upon the agency record pursuant to Rule 56.2 and challenge as unsupported by substantial evidence three principal aspects of Commerce's Final Determination: (1) to select Mexico over Malaysia as a surrogate country; (2) to determine that Mexico sources the highest quality information; and, (3) to adjust the Mexican "freight-on-board" ("FOB") values to a "cost of insurance and freight" ("CIF") basis. See Pls.’ Rule 56.2 Mem. Supp. Mot. for J. Upon the Agency R., ECF No. 30 ( ); see also Pls.’ Reply Br., ECF No. 33 ( ). Defendant United States ("Government") and defendant-intervenors, Bio-Lab, Inc., Clearon Corp. and Occidental Chemical Corporation (collectively "defendant-intervenors") respond that Commerce's determination is supported by substantial evidence and is otherwise in accordance with law. See Def.’s Resp. to Pls. Mot. for J. Upon the Agency R., ECF No. 31 ("Def. Br."); see also Response Brief of Bio-Lab, Inc., Clearon Corp., and Occidental Chemical Corporation, ECF No. 32 ("Def.-Intervenors’ Br.").
For the reasons discussed below, the court sustains Commerce's Final Determination.
On August 10, 2018, Commerce initiated the thirteenth administrative review of the antidumping duty order covering chlorinated isos from the People's Republic of China ("China"). See Initiation of Antidumping and Countervailing Duty Administrative Reviews , 83 Fed. Reg. 39,688 (Dep't Commerce Aug. 10, 2018) (initiation of antidumping and countervailing duty administrative review). The review covered two producers and exporters, Heze Huayi and Kangtai, during the period from June 1, 2017, to May 31, 2018. Id. ; see also Chlorinated Isocyanurates from the People's Republic of China , 84 Fed. Reg. 42,891 (Dep't Commerce Aug. 19, 2019) (preliminary results) ("Preliminary Determination") and accompanying preliminary decision memorandum ("PDM").
Because China is a non-market economy country, the Tariff Act of 1930 ("Tariff Act") requires Commerce to calculate the normal value of chlorinated isos based on surrogate values offered in a comparable market economy. See Tariff Act of 1930, § 773, 19 U.S.C. § 1677b(c)(1) (2015).2
On October 3, 2018, Commerce placed on the record a list of potential surrogate countries that were comparable in terms of economic development to China and solicited comments from interested parties. See PDM at 6-7, 10. This list included Romania, Malaysia, Russia, Brazil, Mexico and Kazakhstan. Pls. Br. at 10; Def. Br. at 3; id. Commerce considered production of comparable merchandise (calcium hypochlorite and sodium hypochlorite) and identical merchandise (chlorinated isos) in its primary surrogate country inquiry. PDM at 6-8. Commerce found that each country listed preliminarily exported either comparable merchandise, identical merchandise or both. PDM at 6-7.
On December 4, 2018, Commerce received comments from respondents (now plaintiffs) and petitioners (now defendant-intervenors) on the list of potential surrogate countries. See Plaintiffs’ Letter on Comments of Surrogate Country Selection, PD 35 (Dec. 4, 2018); see also Letter from Petitioners on Comments on Primary Surrogate Country Selection, PD 32-34 (Dec. 4, 2018) ("Petitioners’ Letter"). Plaintiffs argued that Brazil, Malaysia and Romania were suitable as surrogate countries, and defendant-intervenors argued that Mexico had the highest quality surrogate values. Petitioners’ Letter, PD 32-34; PDM at 6, 10-14; IDM at cmt. 1. Plaintiffs and defendant-intervenors submitted surrogate value information on February 19, 2019, and rebuttal surrogate value information on February 26, 2019. See Plaintiffs’ Letter on Surrogate Values for the Preliminary Results, PD 44-49 (Feb. 19, 2019); see also Petitioners’ Letter on Initial Surrogate Value Data, CD 30, PD 51-54 (Feb. 19, 2019); see also PDM at 8. Plaintiffs submitted their final surrogate value information on July 10, 2019. See Plaintiffs’ Letter on Final Surrogate Value ("SV") Submission (Jul. 10, 2019).
On August 19, 2019, Commerce preliminarily determined that each country on the surrogate country list was a significant producer of merchandise comparable to the subject merchandise — calcium hypochlorite and sodium hypochlorite. PDM at 11-14. However, Commerce found that only Mexico was a significant producer of identical merchandise — chlorinated isos. Id.
In reaching this decision, Commerce relied on information demonstrating that a Mexican company named Aqua-Clor S.A. de C.V. ("Aqua-Clor") produced chlorinated isos and exported a confirmed amount of over 1.6 million kilograms of chlorinated isos during the relevant period of review ("POR"). PDM at 12; IDM at 11; Pls. Br. at 8. Commerce also examined the financial statements of four Malaysian companies — Mey Chern Chemicals SDM ("Mey Chern"), Whiting Sdn. Bhd. ("Whiting"), Accot Technologies Sdn. Bhd. ("Accot") and CCM Chemicals Sdn. Bhd. ("CCM") — and website information for two additional Malaysian producers — Leesonic and Setia Maju. PDM at 12-13. Of these companies, Commerce determined preliminarily that there was sufficient information on the record showing CCM to be a producer of comparable merchandise and Setia Maju to be a producer of identical merchandise but that there was no information on the record that either company was a "significant producer." Id. Commerce noted its "preference to select a surrogate country that produces identical merchandise over one that only produces comparable merchandise" and that the selection of Mexico as the surrogate country was consistent with three prior administrative reviews. Id. at 13-14.
Commerce noted that there were Id. at 14. As there were no surrogate value data or any surrogate financial statements on the record for Brazil, Kazakhstan and Russia, Commerce was "left with Malaysia, Mexico, and Romania as options for potential primary surrogate country." Id.
Commerce weighed the quality of the Mexican data against the Malaysian and Romanian data and found that Mexico had "better [surrogate value] data because it ha[d] usable [surrogate values] for all inputs." Id. at 16. Commerce specified that "we preliminarily find the Malaysian [surrogate values] for raw materials, packing, and energy other than electricity, unusable because they are sourced from Trade Data Monitor ("TDM"), a subscription-based database." Id. at 16. Commerce found that the Romanian data were inadequate for calculating surrogate financial ratios because of a lack of usable financial statements by producers in Romania. Commerce found that the Mexican data were stronger because the financial statements of CYDSA, a Mexican conglomerate with a large chemicals division, were "contemporaneous and indicative of a producer that sells comparable merchandise." IDM at 7-8. PDM at 16.
On February 24, 2020, Commerce published its Final Determination and continued to select Mexico as the primary surrogate country, which yielded a 32.23 percent margin for Heze Huayi and a 58.07 percent margin for Kangtai. IDM at 7-15; Pls. Br. at 2, 4, 29. Commerce's selection of CYDSA's financial statement to calculate the financial ratios and of the data sourced from Global Trade Atlas ("GTA") remained unchanged from the Preliminary Determination. IDM at 2, 15-17.
Commerce made only one change to the Preliminary Determination in deciding to adjust the Mexican FOB import values to a CIF basis to include international freight costs. Id. Commerce explained that, pursuant to a recent administrative review, "respondents are correct that Commerce's practice is to adjust the import value in situations where the primary...
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