Maclean-Fogg Co. v. United States, 2013–1187.

• Decision Date: 03 June 2014
• Docket Number: No. 2013–1187.,2013–1187.
• Parties: MacLEAN–FOGG COMPANY, and Fiskars Brands, Incorporated, Plaintiffs, and Ningbo Yili Import & Export Co., Ltd., Plaintiff, and Evergreen Solar, Inc., Plaintiff–Appellant, and Eagle Metals Distributors, Inc., Plaintiff–Appellant, v. UNITED STATES, Defendant–Appellee, and Aluminum Extrusions Fair Trade Committee, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

753 F.3d 1237

MacLEAN–FOGG COMPANY, and Fiskars Brands, Incorporated, Plaintiffs,

and

Ningbo Yili Import & Export Co., Ltd., Plaintiff,

and

Evergreen Solar, Inc., Plaintiff–Appellant,

and

Eagle Metals Distributors, Inc., Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee,andAluminum Extrusions Fair Trade Committee, Defendant–Appellee.

No. 2013–1187.

United States Court of Appeals,Federal Circuit.

June 3, 2014.

Held Invalid

19 C.F.R. § 351.204(d)(3)

Mark B. Lehnardt, Lehnardt & Lehnardt LLC, of Liberty, Missouri, argued for all plaintiffs-appellants. With him on the brief was Craig A. Lewis, Hogan Lovells U.S. LLP, of Washington, DC, for plaintiff-appellant Evergreen Solar, Inc. Of counsel was Wesley V. Carrington.

Tara K. Hogan, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee United States. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was Joanna Theiss, Attorney, Office for Chief Counsel for Import Trade Administration, United States Department of Commerce, of Washington, DC.

Alan H. Price, Wiley Rein LLP, of Washington, DC, for defendant-appellee Aluminum Extrusions Fair Trade Committee. Of counsel were Robert E. Defrancesco, III, and Laura El–Sabaawi.

Before NEWMAN, CLEVENGER, and REYNA, Circuit Judges.

Opinion for the court filed by Circuit Judge CLEVENGER. Dissenting opinion filed by Circuit Judge REYNA.

CLEVENGER, Circuit Judge.

Evergreen Solar, Inc. and Eagle Metal Distributors, Inc. (collectively, the “Appellants”) appeal the final decision of the United States Court of International Trade sustaining the final all-others countervailing duty rate set by the Department of Commerce (“Commerce”) in an investigation of aluminum extrusions imported from the People's Republic of China. MacLean–Fogg Co. v. United States, 885 F.Supp.2d 1337 (Ct. Int'l Trade 2012) (“ MacLean–Fogg IV ”). We have jurisdiction under 28 U.S.C. § 1295(a)(5). Because the Court of International Trade did not interpret the relevant statute correctly, we reverse.

I

When Commerce conducts a countervailing duty investigation of particular merchandise in a market involving a large number of exporters and producers, the countervailing duty statute authorizes it to select a sample of exporters and producers for individual investigation. 19 U.S.C. § 1677f–1. The countervailing duty statute provides in § 1671d for the calculation of an “all-others” countervailing duty rate which applies to exporters or producers who are not individually investigated. Exporters or producers who are initially selected by Commerce are called mandatory respondents. Mandatory respondents who cooperate with Commerce's investigation are given countervailing duty rates particular to their individual circumstances. Mandatory respondents who fail to cooperate to the best of their ability are given rates determined under § 1677e(b) using adverse facts available (“AFA”). Exporters or producers who are not initially selected for investigation and who wish to participate may supply the necessary information to Commerce to calculate individual countervailing duty rates for them. Such exporters or producers are called voluntary respondents. “All-others” are those exporters or producers not examined as initial selectees or as voluntary respondents.

The general rule for calculation of the all-others countervailing duty rate specifies that the rate will be “an amount equal to the weighted average countervailable subsidy rates established for exporters and producers individually investigated, excluding any zero and de minimis countervailable subsidy rates, and any rates determined entirely under section 1677e of this title.” § 1671d(c)(5)(A)(i). There is an exception to the general rule for calculation of the all-others rate. The exception comes into play “[i]f the countervailable subsidy rates established for all exporters and producers individually investigated are zero or de minimis rates, or are determined entirely under section 1677e.” § 1671d(c)(5)(A)(ii). When the exception is applicable, the statute permits Commerce to “use any reasonable method to establish an all-others rate for exporters and producers not individually investigated.” Id.

This case arose from a countervailing duty investigation of aluminum extrusions from the People's Republic of China, pursuant to a petition filed by Appellee Aluminum Extrusions Fair Trade Committee. There are three categories of exporters or producers in this case. First, the three selected mandatory respondents who refused to cooperate and who consequently were awarded rates entirely under § 1677e. Second, the two voluntary respondents, who after individual investigation were awarded individual rates that reflected their own particular circumstances. And third, the all-others, some of whom are the Appellants, who challenge the legality of the all-others rate Commerce established in this case.

To establish the all-others rate, Commerce first discarded the AFA rate assigned to the three mandatory respondents—correctly so, because the all-others rate statute mandates exclusion of rates determined entirely under § 1677e. Next, Commerce excluded the individual rates assigned to the voluntary respondents, relying on 19 C.F.R. § 351.204(d)(3), which expressly requires exclusion of countervailable subsidy rates for voluntary respondents from the calculation of the all-others rate. Having excluded the voluntary respondents' countervailing duty rates, Commerce had nothing left with which it could calculate the all-others rate under the general rule, 19 U.S.C. § 1671d(c)(5)(A)(i). Commerce thus turned to the process of “us[ing] any reasonable method to establish an all-others rate for exporters and producers not individually investigated” under the exception rule. § 1671d(c)(5)(A)(ii). Commerce decided to impose the 374.15% rate, the AFA rate assigned to the noncooperating mandatory respondents, on all-others as a reasonable method.

Four domestic importers and one exporter of extruded aluminum challenged Commerce's action in the Court of International Trade. The plaintiffs argued that 19 U.S.C. § 1677d was plain on its face in requiring Commerce to use countervailing duty rates for voluntary respondents in calculating the all-others rate, and that Commerce's regulation to the contrary was unlawful. The plaintiffs also challenged the 374.15% rate as resulting from an unreasonable method.

The Court of International Trade concluded that § 1677d is ambiguous on the question of whether countervailing duty rates assigned to voluntary respondents should be included in the calculation of the all-others rate, and that Commerce's regulation is reasonable and thus enforceable. Maclean–Fogg Co. v. United States, 836 F.Supp.2d 1367, 1373–74 (Ct. Int'l Trade 2012) (“ MacLean–Fogg I ”). The Court of International Trade however deemed the method that produced the 374.15% unnecessarily punitive and therefore unreasonable, and remanded the case to Commerce to recalculate the all-others rate. Id. at 1375–76. On reconsideration, the Court of International Trade reiterated its conclusion that the relevant statute is ambiguous and that the regulation is valid. MacLean–Fogg Co. v. United States, 853 F.Supp.2d 1253, 1256 (Ct. Int'l Trade 2012) (“ MacLean–Fogg II ”).

After further rounds of litigation at the Court of International Trade, Commerce arrived at a “reasonable method” for establishing the all-others rate, settling on a AFA-based rate of 137.65%. MacLean–Fogg Co. v. United States, 853 F.Supp.2d 1336, 1341 (Ct. Int'l Trade 2012) (“ MacLean–Fogg III ”); MacLean–Fogg IV, 885 F.Supp.2d at 1343. The all-others rate of 137.65%, sustained by the Court of International Trade, was obtained by subtracting the contributions of subsidy programs specific to the voluntary respondents from the 374.15% rate previously given to the mandatory respondents based on all subsidy programs.

Appellants challenge the Court of International Trade's conclusions in MacLean–Fogg I and II, arguing that the countervailing duty statute is clear on its face in providing that the rates of any exporter or producer who is individually investigated must be included in the calculation of the all-others rate under the general rule. They point out that the voluntary respondents were individually investigated, and indeed received rates particular to their individual circumstances. Because the statute unambiguously provides for inclusion of voluntary respondents' rates in the calculation of the all-others rate, Appellants maintain that there is no room for regulatory interpretation of the statute and that 19 C.F.R. § 351.204(d)(3) therefore cannot lawfully take away what the statute gives: inclusion of voluntary rates in calculating the all-others rate.

Appellants also attack the Court of International Trade's conclusions in MacLean–Fogg III and IV about the methodology used to arrive at the all-others rate. They maintain that the statute does not permit direct application of the adverse inference rate as the all-others rate and also that the all-others rate imposed was not reasonable under the particular circumstances of this case.

We agree with Appellants that the statute unambiguously requires that the rates of any individually investigated exporter or producer be included in the calculation of the all-others rate under the general rule. We hold that 19 C.F.R. § 351.204(d)(3) is invalid and reverse the judgment of the Court of International Trade, remanding for a proper determination of the all-others rate under the general rule. We do not reach the question as to whether the methodology used by Commerce to determine the all-others rate was reasonable under the exception rule.

II

The central question on appeal is whether 19 U.S.C. § 1671d is...