Maclean–Fogg Co. v. United States

• Decision Date: 30 July 2012
• Citation: 34 ITRD 1871,853 F.Supp.2d 1336
• Parties: MacLEAN–FOGG COMPANY, et al., Plaintiffs, v. UNITED STATES, Defendant.
• Court: U.S. Court of International Trade

853 F.Supp.2d 1336

34 ITRD 1871

MacLEAN–FOGG COMPANY, et al., Plaintiffs,

v.UNITED STATES, Defendant.

United States Court of

International Trade.

Slip Op. 12–99.

Consol.¹ Court No. 11–00209.

July 30, 2012.

Thomas M. Keating, Lisa M. Hammond, and Kazumune V. Kano, Hodes Keating & Pilon, of Chicago, IL, for Plaintiffs MacLean–Fogg Co. and Fiskars Brand, Inc.

Mark B. Lehnardt, Lehnardt & Lehnardt LLC, of Liberty, MO, for Plaintiff–Intervenors Eagle Metal Distributors, Inc. and Ningbo Yili Import & Export Co., Ltd.

Craig A. Lewis, T. Clark Weymouth, and Brian S. Janovitz, Hogan Lovells U.S. LLP, of Washington, DC, for Plaintiff–Intervenor Evergreen Solar, Inc.

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

Stephen A. Jones, Christopher T. Cloutier, Daniel L. Schneiderman, Gilbert B. Kaplan, Joshua M. Snead, and Patrick J. Togni, King & Spalding LLP, of Washington, DC, for Defendant–Intervenor Aluminum Extrusions Fair Trade Committee.

OPINION AND ORDER

POGUE, Chief Judge:

This case returns to the court following remand in Maclean–Fogg Co. v. United States, 36 CIT ––––, 836 F.Supp.2d 1367 (2012) (“Maclean–Fogg I ”). In Maclean–Fogg I, and again upon Plaintiffs' motion for reconsideration in MacLean–Fogg Co. v. United States, 36 CIT ––––, 853 F.Supp.2d 1253 (2012) (“MacLean–Fogg II ”), the court found that the Department of Commerce's (“the Department” or “Commerce”) calculation of the all-others 374.15% countervailing duty (“CVD”) rate,² based solely on mandatory respondents' adverse facts available (“AFA”) rate, while legally permissible, was neither reasonable in this instance or based on a reasonable reading of the record. Maclean–Fogg I, 36 CIT at ––––, 836 F.Supp.2d at 1375–76. The court ordered Commerce to either explain how its conclusion is reasonable or, alternatively, recalculate the all-others rate. Id. On remand, Commerce continues to base the all-others rate solely on the mandatory respondents' AFA rate, explaining that this is reasonable because the mandatory respondents represent a significant portion of the market and are therefore representative of the all-others companies. Final Results of Remand Redetermination, ECF No. 62–1, at 1 (“Remand Results”). Plaintiffs, who are some of the all-others companies to whom the rate applies, again seek review of this rate.

Because Commerce failed to explain how the assumption that Respondents used 100% of the subsidies available throughout the entire People's Republic of China (“PRC”) is remedial not punitive—providing no more than an appropriate level of deterrence—the court again remands the rate to Commerce.

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

BACKGROUND⁴

In its investigation of Chinese producers and exporters of aluminum extrusions, Commerce designated the three largest exporters as mandatory respondents.⁵These mandatory respondents failed to respond to Commerce's questionnaire. Maclean–Fogg I, 36 CIT at ––––, 836 F.Supp.2d at 1370. Because the mandatory respondents failed to cooperate, Commerce relied on facts available when calculating the mandatory respondents' CVD rates. 19 U.S.C. § 1677m. Using information provided by the domestic industry, Commerce listed 59 subsidy programs that the importer producers could have availed themselves of and calculated an AFA CVD rate using the highest possible subsidization rate for each of these 59 programs. I & D Memo at Comment 8, 67.⁶ The resulting AFA rate for the mandatory respondents was 374.15%. Maclean–Fogg I, 36 CIT at ––––, 836 F.Supp.2d at 1371. By contrast, two companies that were selected as voluntary respondents received much lower individual rates of 8.02% and 9.94% respectively. Id.

When calculating the “all-others” rate for the remaining companies, Commerce excluded the voluntary respondents' rates from its calculations in accordance with its regulation, 19 C.F.R. § 351.204(d)(3). Maclean–Fogg I, 36 CIT at ––––, 836 F.Supp.2d at 1371. Commerce instead averaged the mandatory respondents' rate, resulting in an all-others rate identical to the AFA rate. Id. In Maclean–Fogg I, Plaintiffs challenged the regulation, the use of AFA rate in the calculation of the all-others rate, and the exclusion of the voluntary respondents' rate, contending that the governing statute, 19 U.S.C. § 1671d(c)(5)(A)(i)–(ii), unambiguously required Commerce to use the rates of all individually investigated respondents when calculating the all-others rate. Id. at 1372–73. This court concluded in Maclean–Fogg I that this statute was ambiguous, allows the use of facts available in a reasonable manner, and permits Commerce to use mandatory respondents' AFA rates in the calculation of the all-others rate without a finding of noncooperation. Id. at 1374 n. 9. Therefore Commerce's regulation and methodology were reasonable. However, the court found that Commerce's methodology was not supported by substantial evidence because it failed to articulate a logical connection for attributing the high mandatory respondents' rate to the all-other companies, and failed to address whether the rate was remedial rather than punitive. Id. at 1375–76.

On remand, Commerce chose to use the same methodology and provided additional explanation for its decision. Remand Results at 1. In addition to reiterating its earlier concerns with rate manipulation, Commerce further explained that the mandatory respondents' exports represent a significant portion of the sales of subject merchandise. Id. at 4–7. By comparison, the voluntary respondents make up a tiny fraction of that market. Id. at 6–7. In light of these significant differences in market share, the Department stated that its continued exclusive use of only the mandatory respondents' rate in the calculation of the all-others rate is a reasonable and reliable reading of record evidence because such a large portion of the market is highly representative of the entire market as a whole. Id. at 8. Commerce considered voluntary respondents' share of the industry too low to be probative of the industry's level of subsidization or to validly challenge the representativeness of mandatory respondents' rate. Id. at 7. Moreover, to include the voluntary respondents' rates would have run contrary to the policy reasons underpinning Commerce's regulation—namely, a fear of manipulation of the all-others rate and a desire to maintain its integrity from potential distortions. Id. at 4–5; see also Antidumping Duties; Countervailing Duties, 62 Fed.Reg. 27,296, 27,310 (Dep't Commerce May 19, 1997). Specifically, Commerce stated that voluntary respondents are more likely self-selected because they know that their CVD rates will be lower. Remand Results at 5. As such, their rates could potentially distort the representativeness of the all-others rate, especially here where such a significant segment of the industry failed to participate, as opposed to the small percentage of the industry that did. Id. The Department further stated that it would have relied on the mandatory respondents' rates regardless of whether they were lower or higher than the voluntary respondents' rates.⁷Id. at 7. Having chosen the mandatory respondents as representatives of the market, Commerce considered it “inappropriate to ignore the fact that [AFA] ... had to be applied to all mandatory company respondents” and thus used the mandatory respondent rates even though they were based on AFA. Id. at 8–9 (quoting Laminated Woven Sacks, 73 Fed.Reg. at 35,639). Plaintiffs again challenge this rate.

STANDARD OF REVIEW

“The court will sustain the Department's determination upon remand if it complies with the court's remand order, is supported by substantial evidence on the record, and is otherwise in accordance with law.” Jinan Yipin Corp. v. United States, 33 CIT ––––, 637 F.Supp.2d 1183, 1185 (2009) (citing 19 U.S.C. § 1516a(b)(1)(B)(1)).

DISCUSSION

Plaintiffs assert again that Commerce unreasonably excluded the voluntary respondents' rates when calculating the all-others rate and unlawfully applied AFA to the all-others companies. However, they also concede that the court has already recognized that this methodology, which averages the rates of mandatory respondents, even where those rates are all based on AFA, is specifically permitted by the statute. Pls.' Comments at 4; Maclean–Fogg I, 36 CIT at ––––, 836 F.Supp.2d at 1374–1375. Furthermore, the court has already approved the decision not to include in that average the rates of the voluntary respondents. Id.

Nonetheless, as we concluded in Maclean–Fogg I, the chosen rate must be based on a reasonable reading of the record evidence. Id. at 1376. Specifically, it must be based on reliable evidence in the record and must be relevant to the all-others respondents. See Dongguan Sunrise Furniture Co. v. United States, 36 CIT ––––, ––– F.Supp.2d ––––, ––––, Slip Op. 12–79, at *8 (June 6, 2012) (“Commerce must provide some justification for finding that ... [this] rate ... is relevant and reliable for this respondent in this time period.”). Commerce's responsibility is to choose “a rate that, on this record, could reasonably be accepted as an approximation of [ ] [the all-others companies'] rate, albeit with a built in increase intended as a deterrent to non-compliance.” KYD, Inc. v. United States, 36 CIT ––––, 807 F.Supp.2d 1372, 1378 (2012). This comports with the SAA requirement that the rate be “reasonably reflective of potential [CVD] margins for...