Maclean–Fogg Co. v. United States

Decision Date04 April 2012
Citation34 ITRD 1396,836 F.Supp.2d 1367
PartiesMACLEAN–FOGG COMPANY, et al., Plaintiffs, v. UNITED STATES, Defendant.
CourtU.S. Court of International Trade


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

Craig A. Lewis, Theodore C. Weymouth, and Brian S. Janovitz, Hogan Lovells U.S. LLP, of Washington, DC, for the PlaintiffIntervenor Evergreen Solar, Inc.

Thomas M. Keating, and Lisa M. Hammond, Hodes, Keating and Pilon, of Chicago, IL, for Plaintiffs Maclean–Fogg Co. and Fiskars Brands, Inc.

Tara K. Hogan, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, for the Defendant. With her on the briefs were Tony West, Assistant Attorney General; Jeanne E. Davidson, Director; and Reginald T. Blades Jr., Assistant Director. Of counsel on the briefs were, Joanna Theiss, Office of the Chief Counsel for Import Administration, United States Department of Commerce, and

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


POGUE, Chief Judge:

In this action, Plaintiffs, four domestic importers and one exporter of extruded aluminum, challenge the all-others countervailing duty (“CVD”) rate set by the Department of Commerce (“the Department” or “Commerce”) in its investigation of their goods imported from the People's Republic of China. We have jurisdiction under Section 516A(a)(2)(B)(i) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2006)1 and 28 U.S.C. § 1581(c).

After a brief review of the relevant background and applicable standard of review, the court will explain why it concludes that Commerce has not presented, for its rate choice, a logical basis or explanation which considers the important aspects of the problem presented. Accordingly, the all-others rate is remanded for reconsideration.


This case arises from Commerce's initiation of companion CVD and antidumping (“AD”) investigations into various Chinese exporters and producers of aluminum extrusions.2See Aluminum Extrusions from the People's Republic of China, 75 Fed.Reg. 22,114 (Dep't Commerce Apr. 27, 2010) (Initiation of Countervailing Duty Investigation) (“ CVD Initiation ”). Because Commerce's investigation involved 114 potential exporter/producers (respondents), Aluminum Extrusions from the People's Republic of China, 76 Fed.Reg. 18,521 (Dep't Commerce Apr. 4, 2011) (Final Affirmative Countervailing Duty Determination) (“ Final Determination ”) and accompanying Issues and Decision Memorandum (“ I & D Memo ”) at Comment 10 (Mar. 28, 2011), Commerce initially selected the three largest respondents by volume as mandatory respondents. 3 However, none of these three mandatory respondents responded to Commerce's initial questionnaire. See Respondent Selection Memorandum at 4, May 18, 2010, ECF No. 39, Tab D (citing 19 U.S.C. § 1677f–1(e)(2)) (“ Respondent Selection Memo ”); I & D Memo, Section VI at 5. Commerce therefore found that these mandatory respondents “withheld requested information and significantly impeded [the] proceeding.” I & D Memo, Section VI. Commerce further found that because the three mandatory respondents failed to act to the best of their abilities in the investigation, an adverse inference was warranted, such that Commerce would use adverse facts available (“AFA”) in calculatingtheir countervailing duty rate. Commerce intended to calculate an AFA rate to ensure the mandatory respondents did not obtain a more favorable rate than if they had cooperated with Commerce's request for information. Id. (relying on and citing 19 U.S.C. § 1677e(b)).

Accordingly, and citing its longstanding practice, in calculating, for the three mandatory respondents, an AFA CVD rate, Final Determination, 76 Fed.Reg. at 18,523,4 Commerce selected the “highest calculated rate in any segment of the proceeding.” Aluminum Extrusions from the People's Republic of China, 75 Fed.Reg. 54,302, 54,305 (Dep't Commerce Sep. 7, 2010) (preliminary affirmative countervailing duty determination) (“ Preliminary Determination ”) (citing Laminated Woven Sacks From the People's Republic of China: Final Affirmative Countervailing Duty Determination and Final Affirmative Determination, in Part, of Critical Circumstances, 73 Fed.Reg. 35,639 (Dep't Commerce June 24, 2008)). More specifically, Commerce typically uses the highest program-specific rates calculated for cooperating respondents in the current or in prior CVD proceedings. Here, Commerce used the “highest calculated subsidy rate for any program otherwise listed that could conceivably be used by the non-cooperating companies” and arrived at a final rate of 374.15% for each of the three mandatory respondents.5Id. at 54,305; Final Determination, 76 Fed.Reg. at 18,523.

Two other companies submitted responses and were chosen by Commerce to participate in the investigation as voluntary respondents: Zhaoqing New Zhongya Aluminum Co., Ltd., Zhongya Shaped Aluminum HK Holding Ltd., and Karlton Aluminum Company Ltd. (collectively “Zhongya”) and Guang Ya Aluminum Industries Co., Ltd., Foshan Guangcheng Aluminum Co., Ltd., Guang Ya Aluminum Industries Hong Kong, Kong Ah International Company Limited, and Yongji Guanghai Aluminum Industry Co., Ltd. (collectively Guang Ya). In the final determination, Commerce issued a final CVD rate of 8.02% ad valorem for Zhongya, and 9.94% ad valorem for Guang Ya. Final Determination, 76 Fed.Reg. at 18,522–23.6

Having calculated rates for the mandatory and voluntary respondents, Commerce then calculated the CVD rate for the remaining “all-other” respondents, arriving at a rate of 374.15%. Final Determination, 76 Fed.Reg. at 18,822–23. This rate is identical to and calculated as a weighted average of the AFA rates Commerce issued for the three non-cooperating mandatory respondents. In choosing to use the weighted average of the rates determined for the mandatory respondents, Commerce excluded the rates calculated for the voluntary respondents. In doing so, Commerce relied on 19 C.F.R. § 351.204(d)(3) which permits Commerce to exclude any rates calculated for voluntary respondents when calculating the all-others rate. I & D Memo, Section XI, Comment 9 at 54; 19 C.F.R. § 351.204(d)(3).

Plaintiffs allege that when averaging rates to calculate the all-others rate, Commerce's decision to omit any rates calculated for voluntary respondents is expressly prohibited by the governing statute, 19 U.S.C. § 1671d(c)(5)(A)(i)(ii) (section 1671d). Plaintiffs also contend that 19 C.F.R. § 351.204(d)(3) is invalidly promulgated in light of the alleged lack of ambiguity of the statute. Finally, Plaintiffs assert that Commerce's chosen methodology is unreasonable and not supported by substantial evidence.


When reviewing Commerce's “determinations, findings or conclusions” in a countervailing duty investigation, the Court determines whether they are “unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence is evidence which, considering the record as a whole, “a reasonable mind might accept as adequate to support a conclusion.” Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 477, 491, 71 S.Ct. 456, 95 L.Ed. 456 (1951) (citing Consol. Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). In presenting its findings, the agency must explain its standards and “rationally connect them to the conclusions drawn from the record.” U.S. Steel Corp. v. United States, Slip Op. 10–104, 2010 WL 3564705 at *1, 2010 Ct. Intl. Trade LEXIS 107 (CIT Sep. 13, 2010) at *4 (citing Motor Vehicle Mfrs. Ass'n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983); Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984)). The conclusion Commerce reaches need not be the best or only possible conclusion, merely a reasonable one. See Lifestyle Enterprise, Inc. v. United States, 768 F.Supp.2d 1286, 1304–05 (CIT 2011).


Because Plaintiffs' first two claims are related, the court will consider them in Part A below, and then turn to Plaintiffs' remaining claim in Part B.


Plaintiffs first raise a straightforward Chevron challenge,7 asserting that section 1671d unambiguously requires that the all-others rates be based on all “individually investigated” respondents and therefore Commerce erred by excluding voluntary respondents from the calculation of the all-others rate.

Section 1671d states, in relevant part:

[T]he all-others rate shall 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.[8

If 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 of this title, the administering authority may use any reasonable method to establish an all-others rate for exporters and producers not individually investigated, including averaging the weighted average countervailable subsidy rates determined for the exporters and producers individually investigated.

19 U.S.C. § 1671d(c)(5)(A)(i)(ii).

Plaintiffs assert that the statute is unambiguous and clearly refers to all individually investigated respondents, whether mandatory or voluntary. They urge the court to read the statute as establishing only two distinct categories of respondents: those that are individually...

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