Shandong Huanri (Group) General Co. v. U.S.

• Decision Date: 05 July 2007
• Docket Number: Court No. 05-00648.,Slip Op. 07-105.
• Citation: 493 F.Supp.2d 1353
• Parties: SHANDONG HUANRI (GROUP) GENERAL CO.; Shandong Huanri Group Co., Ltd.; and Laizhou Huanri Automobile Parts Co., Ltd., Plaintiff, v. UNITED STATES, Defendant The Coalition for the Preservation of American Brake Drum and Rotor Aftermarket Manufacturers, Defendant-Intervenor.
• Court: U.S. Court of International Trade

493 F.Supp.2d 1353

SHANDONG HUANRI (GROUP) GENERAL CO.; Shandong Huanri Group Co., Ltd.; and Laizhou Huanri Automobile Parts Co., Ltd., Plaintiff, v. UNITED STATES, Defendant The Coalition for the Preservation of

American Brake Drum and Rotor Aftermarket Manufacturers, Defendant-Intervenor.

Slip Op. 07-105.

Court No. 05-00648.

United States Court of International Trade.

July 5, 2007.

Trade Pacific, PLLC, (Robert G. Gosselink) for Shandong Huanri (Group) General Co.; Shandong Huanri Group Co., Ltd.; and Laizhou Huanri Automobile Parts Co., Ltd., Plaintiffs.

Peter D. Keisler, Assistant Attorney General, Civil Division, United States Department of Justice; Jeanne E. Davidson, Director, Commercial Litigation Branch, Civil Division, United States Department of Justice; Ada E. Bosque, United States Department of Commerce Office of Chief Counsel for Import Administration, of counsel, for defendant.

Porter, Wright, Morris & Arthur, LLP, Washington, DC, (Leslie Alan Glick; Renata Brandao Vasconcellos) for The Coalition for the Preservation of American Brake Drum and Rotor Aftermarket Manufacturers, Defendant-Intervenor.

TSOUCALAS, Senior Judge.

Before the Court is Plaintiffs' Shandong Huanri (Group) General Co., Shandong Huanri Group Co., Ltd. and Laizhou Huanri Automobile Parts Co., Ltd. (collectively "Plaintiffs" or "Huanri") motion for judgment upon the agency record brought pursuant to USCIT Rule 56.2. Plaintiffs challenge aspects of the United States Department of Commerce's ("Commerce") determination Brake Rotors From the People's Republic of China: Final Results and Partial Rescission of the Seventh Administrative Review; Final Results of the Eleventh New Shipper Review, 70 Fed. Reg. 69,937 (Nov. 18, 2005) ("Final Results"). Plaintiffs contend, inter alia, that Commerce changed its separate rates methodology, and did so without notice and comment. See Pl.'s R. 56.2 Mot. J. Upon Agency Rec. ("Pl.'s Br.") at 10 ("Commerce abused its discretion when it changed its separate rates practice[.]"). For the following reasons, the Court finds Plaintiffs' contentions to be without merit, and denies their motion.¹

JURISDICTION & STANDARD OF REVIEW

The Court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2000) and 19 U.S.C. § 1516a(b)(1)(B)(i) (2000). When reviewing the final results in antidumping administrative reviews "[t]he court shall hold unlawful any determination, finding, or conclusion ... found ... to be 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 more than a mere scintilla." Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938). "Substantial evidence is `such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Huaiyin Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374 (Fed.Cir.2003) (quoting Consol. Edison Co., 305 U.S. at 229, 59 S.Ct. 206). In determining the existence of substantial evidence, a reviewing Court must consider "the record as a whole, including evidence that supports as well as evidence that `fairly detracts from the substantiality of the evidence,'" Huaiyin, 322 F.3d at 1374 (quoting Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed.Cir.1984)).

BACKGROUND

The facts of this case have been fully set forth in the prior decisions of this Court. The facts relevant to the instant inquiry are as follows. Plaintiff Shandong Huanri (Group) General Company ("Huanri")² was an exporter of brake rotors ("subject merchandise") subject to the antidumping ("AD") duty order on Brake Rotors From the People's Republic of China during the seventh administrative review.³ See Brake Rotors from the People's Republic of China, 69 Fed.Reg. 30,282 (Dep't Commerce May 27, 2004) (initiation). Defendant-Intervenor, The Coalition for the Preservation of the American Brake Drum and Rotor Aftermarket Manufacturers ("Coalition"), was a domestic petitioner in the original antidumping investigation that resulted in the AD order, and an interested party in all reviews of the order. See Brake Rotors From the People's Republic of China, 62 Fed.Reg. 18,740 (Dep't Commerce Apr. 17, 1997) (antidumping order). In both the preliminary and final results of the seventh administrative review of the AD order, Commerce denied Huanri General a separate rate. See Brake Rotors From the People's Republic of China: Preliminary Results and Partial Recision of the Seventh Administrative Review and Preliminary Results of the Eleventh New Shipper Review, 70 Fed.Reg. 24,382, 24,387 (May 9, 2005) ("Preliminary Results"); Final Results, 70 Fed.Reg. at 69,939.

Commerce denied Huanri a separate rate, primarily, on the basis that Huanri was controlled by the Panjacun Village Committee. As there was record evidence indicating that the Village Committee operated under the leadership of the Chinese Communist Party, Commerce found that Village Committee was a form of Chinese government. Indeed, in its final results, Commerce explained that Huanri was "controlled by the Panjacun Village Committee, and ... determined that this entity was subject to central government control." As it did in its preliminary results, Commerce continued "to find that Huanri is not entitled to a separate rate in these final results. Because [Commerce] has determined that Huanri does not qualify for a separate rate, [Commerce] determine[s] that Huanri is part of the PRC-wide entity and will be subject to the PRC-wide rate." Final Results, 70 Fed.Reg. at 69,939 (internal citation omitted).

Such a finding was necessary because of the People's Republic of China's ("PRC") status as a nonmarket economy ("NME") country. As will be discussed infra, in a NME country, a presumption of government control for exporters automatically attaches. See Coal. for the Preservation of Am. Brake Drum & Rotor Aftermarket Mfrs. v. United States, 23 CIT 88, 100, 44 F.Supp.2d 229, 242 (1999) ("Coalition I") (finding that pursuant to "the broad authority delegated to it from Congress, Commerce has employed a presumption of state control for exporters in a nonmarket economy."). Unless this presumption is rebutted, Commerce assigns the exporter the country-wide antidumping duty rate. Transcom Inc. v. United States, 182 F.3d 876, 882 (Fed.Cir.1999). In order to rebut this presumption and qualify for a separate, company-specific rate, an exporter must "affirmatively demonstrate its entitlement to a separate, company-specific margin by showing an absence of central government control, both in law and in fact, with respect to exports." Sigma Corp. v. United States, 117 F.3d 1401, 1405 (Fed.Cir.1997). In the instant matter, Commerce determined that Huanri failed to rebut this presumption with respect to de facto government control.

Commerce took the following steps in determining whether Huanri was free from de facto government control. In investigating Huanri's eligibility for a separate rate, Commerce issued Huanri a Questionnaire in which it asked the respondents to "describe and explain" who "owns" and "controls" its company, including the "company's relationship with the national, provincial, and local governments, including ministries or offices of those governments." See Huanri General's Resp. to the Department's Original Questionnaire in the Seventh Administrative Review. In its questionnaire response, Huanri maintained that it "has no relationship with the national, provincial, and local governments, including ministries or offices of those governments." Id. Next, Commerce considered the "Organic Law on the Village Committee of the People's Republic of China of 1999" ("VCL") placed upon the record by the Coalition. Thereafter, Commerce issued a supplemental questionnaire to Huanri, inquiring specifically into whether the Panjacun Village Committee owned and controlled Huanri. See Resp. Opposition Pls.' Mot, J. Upon Agency Rec. ("Response") at 2. Therein, Huanri represented that it is "collectively owned" by the villagers of Panjacun Village, and further stated that the Village Committee "has control over the investment of capital raised by the villagers." See Shandong Huanri Group General Company Supplemental Questionnaire at 3-4. From March 23-26, 2005, Commerce conducted an onsite verification of Huanri in Panjacun Village, China. During its verification Commerce conducted an onsite inspection of the manufacturers' and exporters' facilities, and examined relevant sales and financial records. See Verification of the Response of Shandong Huanri Group General Company ("Verification Report") at 13-17.

Following its investigation, Commerce issued its Preliminary Results, denying Huanri a separate rate. See Preliminary Results, 70 Fed.Reg. at 28,387. Therein, Commerce preliminarily found "that Huanri General, by virtue of the applicability of ... other PRC laws ..., has demonstrated an absence of de jure central government control." Id. at 24,388. This notwithstanding, Commerce preliminarily denied Huanri a separate rate because Huanri had not demonstrated an absence of de facto control. Id. at 24,388-89. Only the absence of de facto control is at issue in the instant matter. Together with the issuance of the Preliminary Results, Commerce also invited special comments and additional supporting information concerning this issue. Id. at 24,389; see also Department's Letter of June 6, 2005.

On November 18, 2005, Commerce issued its final results. See Final Results, 70 Fed.Reg. at 69,939; see also Issues and Decision Memorandum for the Final Results in the 2003/2004 Administrative Review of Brake Rotors from the People's Republic of China (Nov. 7, 2005) ("Issues & Dec. Mem."). Consistent with its Preliminary Results, therein, Commerce denied Huanri a separate rate because it concluded that the Panjacun Village Committee is "a form of government in the PRC." Issues & Dec. Mem. at 18. Commerce explained...