Shelter Forest Int'l Acquisition, Inc. v. United States

• Citation: 497 F.Supp.3d 1388
• Decision Date: 18 February 2021
• Docket Number: Consol. Court No. 19-00212,Slip Op. 21-19
• Parties: SHELTER FOREST INTERNATIONAL ACQUISITION, INC., et al., Plaintiffs, and IKEA Supply AG, Consolidated Plaintiff, and Taraca Pacific, Inc. et al., Plaintiff-Intervenors, v. UNITED STATES, Defendant, Coalition for Fair Trade in Hardwood Plywood, Defendant-Intervenor.
• Court: U.S. Court of International Trade

497 F.Supp.3d 1388

SHELTER FOREST INTERNATIONAL ACQUISITION, INC., et al., Plaintiffs,

and

IKEA Supply AG, Consolidated Plaintiff,

and

Taraca Pacific, Inc. et al., Plaintiff-Intervenors,

v.UNITED STATES, Defendant,Coalition for Fair Trade in Hardwood Plywood, Defendant-Intervenor.

Slip Op. 21-19

Consol. Court No. 19-00212

United States Court of International Trade.

February 18, 2021

Daniel L. Porter, Curtis, Mallet-Prevost, Colt & Mosle LLP, of Washington, DC, for Plaintiffs Shelter Forest International Acquisition, Inc., Xuzhou Shelter Import & Export Co., Ltd., and Shandong Shelter Forest Products Co., Ltd.

Kristen S. Smith and Sarah E. Yuskaitis, Sandler, Travis & Rosenberg, PA of Washington, DC, for Consolidated Plaintiff IKEA Supply AG.

Jeffrey S. Grimson, Mowry & Grimson, PLLC, of Washington, DC, for Plaintiff-Intervenors Taraca Pacific, Inc., Liberty Woods International, Inc., MJB Wood Group, Inc., and Patriot Timber Products, Inc. With him on the brief were Bryan P. Cenko, Jill A. Cramer, Kristin H. Mowry and Sarah M. Wyss.

Gregory S. Menegaz, deKieffer & Horgan, PLLC, of Washington, DC, for Plaintiff-Intervenors Shanghai Futuwood Trading Co., Ltd., Linyi Glary Plywood Co., Ltd., and Far East American, Inc. With him on the brief were J. Kevin Horgan and Alexandra H. Salzman.

Sonia M. Orfield, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for the Defendant. With her on the brief was Savannah R. Maxwell, Of Counsel, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce.

Timothy C. Brightbill, Wiley Rein LLP, of Washington, DC, for Defendant-Intervenor Coalition for Fair Trade in Hardwood Plywood. With him on the brief were Elizabeth S. Lee, John A. Riggins, Maureen E. Thorson, Stephanie M. Bell, and Tessa V. Capeloto.

OPINION

Restani, Judge:

This action concerns the United States Department of Commerce's ("Commerce") affirmative determination that certain merchandise constitutes later-developed merchandise and is circumventing the antidumping and countervailing duty orders on hardwood plywood from China under 19 U.S.C § 1677j(d).¹ Consolidated Plaintiffs, Shelter Forest International Acquisition Inc., et. al. ("Shelter Forest") and IKEA Supply AG., et al. ("IKEA"), and Plaintiff-Intervenors, Shanghai Futuwood Trading Co., et. al. ("Futuwood") and Taraca Pacific Inc., et al. (the "Importer's Alliance"), challenge Commerce's affirmative anticircumvention determination.² The Government and Defendant-Intervenor, the Coalition for Fair Trade in Hardwood Plywood (the "Coalition"), maintain that Commerce's determination is supported by substantial evidence and in accordance with law.³

Before the court are six issues: (1) whether Commerce's affirmative circumvention determination that inquiry merchandise constitutes later-developed merchandise within the meaning of 19 U.S.C. § 1677j(d) is supported by substantial evidence and in accordance with law, (2) whether Commerce's refusal to review Shelter Forest's submission of new factual information was reasonable, (3) whether Commerce's application of the China-wide rate as the cash deposit rate was reasonable, (4) whether Commerce's decision to apply the results of its determination as of the signature date, not the publication date, of the initiation of the inquiry was lawful pursuant to 19 C.F.R. § 351.225(l)(2), (5) whether Commerce was required to notify the U.S. International Trade Commission ("ITC") prior to its determination, and (6) whether Commerce reasonably rejected IKEA's rebuttal case brief for containing untimely affirmative argument.

For the following reasons, the court remands this case for reconsideration consistent with this opinion.

BACKGROUND

In January 2018, Commerce issued orders on certain hardwood plywood products from China. In relevant part, the Orders⁴ cover:

...hardwood and decorative plywood, and certain veneered panels as described below. For purposes of this proceeding, hardwood and decorative plywood is defined as a generally flat, multilayered plywood or other veneered panel, consisting of two or more layers or plies of wood veneers and a core, with the face and/or back veneer made of non-coniferous wood (hardwood) or bamboo. The veneers, along with the core may be glued or otherwise bonded together. ...

...For purposes of [the Orders,] a "veneer" is a slice of wood regardless of thickness which is cut, sliced or sawed from a log, bolt, or flitch. The face and back veneers are the outermost veneer of wood on either side of the core irrespective of additional surface coatings or covers as described below. The core of hardwood and decorative plywood consists of the layer or layers of one or more material(s) that are situated between the face and back veneers. The core may be composed of a range of materials, including but not limited to hardwood, softwood, particleboard, or medium-density fiberboard (MDF).

AD Order, 83 Fed. Reg. at 512 ; CVD Order, 83 Fed. Reg. at 515.

In June 2018, the Coalition requested Commerce conduct an anticircumvention inquiry pursuant to 19 U.S.C. § 1677j(c) - (d) and 19 CFR § 351.225(i) - (j). See Letter from Petitioner, Certain Hardwood Plywood Products from the People's Republic of China: Request for Anti-Circumvention Inquiry at 2–4, P.R. 1-4 (June 26, 2018) ("Petitioner's Request"). Plaintiffs provided comments to Commerce opposing this request.⁵ In September 2018, Commerce initiated an anticircumvention inquiry pursuant to 19 U.S.C. § 1677j(d) with respect to later-developed merchandise. See Certain Hardwood Plywood Products from the People's Republic of China: Initiation of Anti-Circumvention Inquiry on the Antidumping Duty and Countervailing Duty Orders, 83 Fed. Reg. 47,883 (Dep't Commerce Sept. 21, 2018) ("Initiation Notice"). This inquiry sought to determine whether: (1) certain plywood with face and back veneers made of radiata and/or agathis pine (2) "[h]as a Toxic Substances Control Act (TSCA) or California Air Resources Board (CARB) label certifying that it is compliant with TSCA/CARB requirements; and (3) is made with a resin, the majority of which is comprised of one or more of the following three product types—urea formaldehyde, polyvinyl acetate, and/or soy" ("inquiry merchandise") is later-developed merchandise circumventing the Orders. Id. at 47,883, 47,885.

In initiating this inquiry, Commerce examined the Coalition's claims that inquiry merchandise was not commercially available prior to the initiation of the investigations, but was developed, produced and marketed after the Orders as "a direct substitute for merchandise subject to the Orders." Id. at 47,883, 47,885 –86. Commerce identified 43 Chinese exporters of inquiry merchandise, but due to resource constraints ostensibly limited individual examination to three mandatory respondents who account for the largest exports by volume: Lianyungang Yuantai International Co., Ltd. ("Yuantai"), Linyi Glary Plywood Co., Ltd. ("Glary"), and Shanghai Futuwood Trading Co., Ltd. ("Futuwood"). See Anti-Circumvention Inquiry of Certain Hardwood Plywood Products from the People's Republic of China: Respondent Selection, at 2–6, P.R. 128 (Nov. 9, 2018) ("Respondent Selection Memo"). Commerce issued inquiry (and supplemental) questionnaires to the three exporters.⁶ Commerce received responses from the three exporters as well as a sua sponte response to some of the questions raised in a supplemental questionnaire from Shelter Forest. Shelter Forest, Response to Supplemental Questionnaire, P.R. 159 (Feb. 12, 2019).

Commerce issued a preliminary affirmative determination, finding that inquiry merchandise "constitutes later-developed merchandise that is circumventing, and should be included within, the scope of the Orders." Preliminary Decision Memorandum for the Anti-Circumvention Inquiry on the Antidumping and Countervailing Duty Orders on Certain Hardwood Plywood Products from the People's Republic of China at 21, A-570-051, C-570-052, P.R. 166, (Dep't Commerce June 4, 2019) ("PDM"). In its review of the evidence submitted, Commerce determined that: (1) the inquiry merchandise was not commercially available at the time of the initiation of the investigations of the Orders, PDM at 9–17, (2) applying the statutory criteria, inquiry merchandise is similar to subject merchandise such that it should be included within the scope of the Orders, see id. at 17–21; see also 19 U.S.C. § 1677j(d)(1), and (3) the merchandise under consideration did not incorporate a significant technological advance or alteration of an earlier product requiring Commerce to notify the ITC under 19 U.S.C. § 1677j(e)(1)(C), PDM at 21.

Commerce directed U.S. Customs and Border Protection ("CBP") to "suspend liquidation and to require a cash deposit of estimated duties on unliquidated entries of inquiry merchandise that were entered, or withdrawn from warehouse, for consumption on or after September 18, 2018[.]" Certain Hardwood Plywood Products From the People's Republic of China: Preliminary Affirmative Determination of Circumvention of the Antidumping Duty and Countervailing Duty Orders, 84 Fed. Reg. 27,081, 27,082 (Dep't Commerce June 11, 2019). The parties dispute whether the signature date (September 18, 2018) or the publication date in the Federal Register (September 21, 2018) is the proper date for Commerce to rely on as the date of initiation, pursuant to 19 C.F.R. § 351.225(l)(2). See Gov. Br. at 53–56; Coalition Br. at 47–50; Shelter Forest Br. at 47–53; Importers Alliance Br. at 34–43; I & D Memo at 41–43.

In response to the preliminary determination, Shelter Forest submitted information regarding the composition of its glue, which Commerce rejected as untimely new factual information ("NFI") pursuant to 19 C.F.R. § 351.301 and 19 C.F.R. § 351.302. See Letter from Shelter Forest, Response to the Department's Question Regarding E0 Glue, P.R. 183 (July 3, 2019) ("Shelter Forest July 3 Letter Submission"); ...