Hebei Jiheng Chem. Co. v. United States , 161 F. Supp. 3d 1322 ( 2016 )

Slip Op. 16 - 
UNITED STATES COURT OF INTERNATIONAL TRADE
HEBEI JIHENG CHEMICALS CO.,
LTD.,
Plaintiff, Before: Donald C. Pogue,
Senior Judge
v.
Court No. 14-00337
UNITED STATES,
Defendant.
OPINION
[final countervailing duty determination affirmed]
Dated: February
Lizbeth R. Levinson and Ronald M. Wisla, Kutak Rock
LLP, of Washington, DC, for Plaintiff, Hebei Jiheng Chemicals
Co., Ltd.
David F. D’Alessandris, Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice,
of Washington, DC, for the Defendant. With him on the brief were
Benjamin C. Mizer, Principal Deputy Assistant Attorney General,
Jeanne E. Davidson, Director, and Patricia M. McCarthy,
Assistant Director. Of counsel was Lisa W. Wang, Attorney,
Office of the Chief Counsel for Import Administration, U.S.
Department of Commerce, of Washington, DC.
James R. Cannon, Jr. and Ulrika K. Swanson, Cassidy
Levy Kent (USA), LLP, of Washington, DC, for Defendant-
Intervenors Clearon Corp. and Occidental Chemical Corp.
Pogue, Senior Judge: In this action, Plaintiff Hebei
Jiheng Chemicals Co., Ltd. (“Jiheng”) challenges the final
determination of the U.S. Department of Commerce (“Commerce”) in
the countervailing duty (“CVD”) investigation of chlorinated
Court No. 14-00337 Page 2
isocyanurates from the People’s Republic of China (“PRC”).1
Plaintiff challenges Commerce’s determination, claiming that
Commerce misread the record regarding preferential electricity
rates provided to the Plaintiff by the Government of China
(“GOC”), and thereby “vastly overstated the calculated net
benefit” conferred on Plaintiff and impermissibly applied
adverse facts available (“AFA”) to Plaintiff, a cooperating
respondent.2
Because Commerce’s benefit calculation was based on a
reasonable reading of the record evidence, its decision is
supported by substantial evidence. Because Commerce’s
1
Compl., ECF No. 7, at ¶¶ 1-2; see Chlorinated Isocyanurates
from the [PRC], 79 Fed. Reg. 56,560 (Dep’t Commerce Sept. 22,
2014) (final affirmative countervailing duty determination;
2012) (“Final Determination”) and accompanying Issues & Decision
Mem., C-570-991, Investigation (Sept. 8, 2014) (“Final I&D
Mem.”). Jiheng is “a Chinese producer and exporter to the
United States of subject chlorinated isocyanurates.” Mem. of P.
& A. in Supp. of Pl.’s Mot. for J. on the Agency R., ECF No.
25-2 (“Pl.’s Br.”), at 1. Chlorinated isocyanurates, as defined
by the scope of the Final Determination, are “derivatives of
cyanuric acid, described as chlorinated s-triazine triones,” the
“three primary chemical compositions of chlorinated
isocyanurates” being “(1) Trichloroisocyanuric acid (‘TCCA’)
(Cl3(NCO)3), (2) sodium dichloroisocyanurate (dihydrate)
[(‘SDIC’)] (NaCl2(NCO)3 X 2H2O), and (3) sodium
dichloroisocyanurate (anhydrous) (NaCl2(NCO)3).” Final
Determination, 79 Fed. Reg. at 56,561.
2
Pl.’s Br., ECF No. 25-2, at 5-15. The court has jurisdiction
pursuant to § 516A(a)(2)(B)(i) of the Tariff Act of 1930, as
amended, 19 U.S.C. § 1516a(a)(2)(B)(i) (2012) and 28 U.S.C.
§ 1581(c) (2012). All further citations to the Tariff Act of
1930, as amended, are to Title 19 of the U.S. Code, 2012
edition.
Court No. 14-00337 Page 3
application of AFA to the GOC, and the collateral impact of that
decision on Plaintiff, is reasonably within the agency’s
discretion, its decision is in accordance with law. The court,
accordingly, affirms.
BACKGROUND
In the administrative proceeding challenged here,
Commerce initiated a CVD investigation, following a petition
filed by Defendant-Intervenors,3 to determine whether producers
and exporters of chlorinated isocyanurates in the PRC had
received countervailable subsidies within the meaning of
19 U.S.C. §§ 1671, 1677(5).4 Commerce selected Plaintiff as one
of two mandatory respondents.5
3
Clearon Corp. and Occidental Chemical Corp. are domestic
producers of chlorinated isocyanurates. Chlorinated
Isocyanurates from the [PRC], 78 Fed. Reg. 59,001, 59,001 (Dep’t
Commerce Sept. 25, 2013) (initiation of countervailing duty
investigation) (“CVD Initiation”).
4
CVD Initiation, 78 Fed. Reg. at 59,001. Commerce will impose a
countervailing duty on an import whenever it determines that
“the government of a country . . . is providing, directly or
indirectly, a countervailable subsidy with respect to the
manufacture, production, or export of a class or kind of
merchandise imported, or sold (or likely to be sold) for
importation, into the United States.” 19 U.S.C. § 1671(a)(1).
The International Trade Commission must also find that “an
industry in the United States” is “materially injured” or
“threatened with material injury,” by the importation of those
imports. Id. at § 1671(a)(2). The International Trade
Commission’s determination is not at issue in this case. A
subsidy is countervailable when it provides a “financial
contribution” to a “specific” industry, and “a benefit is
thereby conferred” upon the respondent. Id. at §§ 1677(5), (5A).
(footnote continued)
Court No. 14-00337 Page 4
To investigate the Petitioner’s allegation that the
GOC had subsidized respondents’ electricity costs, Commerce sent
initial and supplemental questionnaires to the GOC and mandatory
respondents.6 While respondents’ filings were responsive,7 the
A benefit is conferred upon a respondent when “goods or
services,” such as electricity, “are provided for less than
adequate remuneration.” Id. at § 1677(5)(E)(iv). Ideally, the
“adequacy of remuneration” is measured by “comparing the
government price,” the price paid by the respondent, “to a
market-determined price for the good or service resulting from
actual transactions in the country in question,” the benchmark
price. 19 C.F.R. § 351.511(a)(2)(i) (2012).
5
Chlorinated Isocyanurates from the [PRC], 79 Fed. Reg. 10,097,
10,098 (Dep’t Commerce Feb. 24, 2014) (preliminary determination
and alignment of final determination with final antidumping
determination) and accompanying Issues & Decisions Mem., C—570-
991, Investigation (Feb. 11, 2014) (“Prelim. I&D Mem.”) at 3
(selecting Plaintiff and Juancheng Kangtai Chemical Co., Ltd.,
as mandatory respondents based on their status as the largest,
by volume, producers/exporters of chlorinated isocyanurates from
the PRC to the United States during the period of
investigation); see 19 U.S.C. § 1677f-1(e)(2)(A)(ii) (“If the
administering authority determines that it is not practicable to
determine individual countervailable subsidy rates [for each
known exporter or producer of subject merchandise] because of
the large number of exporters or producers involved in the
investigation or review, the administering authority may . . .
determine individual countervailable subsidy rates for a
reasonable number of exporters or producers by limiting its
examination to . . . exporters and producers accounting for the
largest volume of the subject merchandise from the exporting
country that the administering authority determines can be
reasonably examined.”); 19 C.F.R. § 351.204(c) (“[Commerce] may
limit the investigation using [the] method described in
[19 U.S.C. § 1677f-1(e)(2)(A)(ii)]”).
6
Prelim. I&D Mem., supra note 5, at 1-2. To determine whether
there is a countervailable subsidy, “Commerce often requires
information from the foreign government allegedly providing
[that] subsidy.” Fine Furniture (Shanghai) Ltd. v. United
States, 748 F.3d 1365, 1369-70 (Fed. Cir. 2014); see Final I&D
(footnote continued)
Court No. 14-00337 Page 5
GOC did not provide, in either questionnaire, requested
province-specific information on its electricity pricing
practices.8 “[N]ecessary information regarding the GOC’s
provision of electricity [was therefore] not on the record.”9
Consequently, Commerce had to “rely on facts otherwise
available,” pursuant to 19 U.S.C. § 1677e(a) to evaluate the
GOC’s electricity pricing practices.10 Further, Commerce found
that “the GOC [had] failed to cooperate by not acting to the
best of its ability,” and determined that “an adverse inference
was warranted in its application of the facts available”
provision, pursuant to 19 U.S.C. § 1677e(b).11
Drawing adverse inferences regarding the facts
available, Commerce determined that the GOC’s provision of
electricity was “a financial contribution within the meaning of
[19 U.S.C. § 1677(5)(D)] and [was] specific within the meaning
Mem., supra note 1, at 21 (“In a CVD case, [Commerce] requires
information from both the government of the country whose
merchandise is under investigation and the foreign producers and
exporters.”).
7
Final I&D Mem., supra note 1, at 21.
8
Final Determination, 79 Fed. Reg. at 56,561; Final I&D Mem.,
supra note 1, at 9.
9
Final Determination, 79 Fed. Reg. at 56,561.
10
Id.
11
Id.
Court No. 14-00337 Page 6
of [19 U.S.C. § 1677(5A)].”12 These determinations are
uncontested here.13 Commerce also used adverse facts available
when it selected the benchmark rates used to calculate the
benefit conferred on the respondents.14 Specifically, for the
benchmark Commerce selected the highest electricity rates on the
record for the respondents’ rate and user categories, the large
industry rate schedule for Zhejiang province.15 “To calculate
the benefit,” Commerce “subtracted the amount paid by the
respondents for electricity”16 from the “benchmark electricity
12
Id.13
Pl.’s Br., ECF No. 25-2, at 5 (“Jiheng does not dispute
Commerce’s application of [AFA] with respect to the provision of
electricity for [less than adequate remuneration].”).
14
Final Determination, 79 Fed. Reg. at 56,561; Final I&D Mem.,
supra note 1, at 21 (“This benchmark reflects an adverse
inference, which [Commerce] drew as a result of the GOC’s
failure to act to the best of its ability in providing requested
information about its provision of electricity in this
investigation.”).
15
Final I&D Mem., supra note 1, at 10, 21, 30; Prelim. Benchmark
Mem., Chlorinated Isocyanurates from the [PRC], C-570-991,
Investigation (Feb. 11, 2014) (adopted in Final Determination,
79 Fed. Reg. at 56,561; Final I&D Mem., supra note 1, at 10)
(“Prelim. Benchmark Mem.”) at 1, attach. 1 (electricity
benchmark table), reproduced in Def.’s App. in Supp. of Mem. in
Opp’n to [Pl.’s Br.], ECF No. 30-1 (“Def.’s App.”) at Tab 4;
see also GOC’s Initial Questionnaire Resp., Chlorinated
Isocyanurates from the [PRC], C-570-991, Investigation (Dec. 20,
2013) at Ex. E2-3 (Electricity Sales Schedule of Zhejiang Grid),
reproduced in Def.’s App., ECF No. 30-1 at Tab 2 (“Zhejiang
Electricity Schedule”).
16
Commerce “relied on [respondents] records” to “the extent that
[they were] usable and verifiable,” to determine what the
(footnote continued)
Court No. 14-00337 Page 7
price.”17 Commerce accordingly determined that “subsidies [had]
been provided to producers and exporters of chlorinated
isocyanurates . . . in the [PRC],”18 and that Jiheng’s total
estimated countervailable subsidy rate was 20.06 percent.19
Plaintiff challenges this determination as unsupported
by substantial evidence and not in accordance with law, first
alleging that Commerce “misinterpreted the . . . [Zhejiang]
electricity schedule” as a three-tier rather than four-tier
pricing system,20 and second claiming Commerce incorrectly
selected “large industry” rates rather than rates “specific to
respondents actually paid for electricity. Final I&D Mem., supra
note 1, at 21. Commerce found that Hebei Jiheng Group Co., Ltd.
(“Jiheng Group”), “a holding company and majority shareholder of
Jiheng, which provides raw materials (sulfuric acid and steam)
to Jiheng and other affiliated companies,” Prelim. I&D Mem.,
supra note 5, at 5, was found to have “failed to report its
electricity purchases for one of its branch companies,” such
that “necessary information regarding [its] electricity
purchases [were] not on the record,” and Commerce had to “rely
on facts otherwise available in this final determination in
calculating the Jiheng Group's CVD rate,” Final Determination,
79 Fed. Reg. at 56,561 (citing 19 U.S.C. § 1677e(a)). Commerce
further found that “Jiheng Group failed to cooperate by not
acting to the best of its ability and, consequently, an adverse
inference is warranted in the application of facts available.”
Id. (citing 19 U.S.C. § 1677e(b)).
17
Final I&D Mem., supra note 1, at 22. From this benefit,
Commerce calculated the respondents’ respective countervailable
subsidy rates. Id.
18
Id. at 1; Final Determination, 79 Fed. Reg. at 56,560.
19
Final Determination, 79 Fed. Reg. at 56,562.
20
Pl.’s Br., ECF No. 25-2, at 6; see generally id. at 5-11.
Court No. 14-00337 Page 8
chlor-alkali producers.”21 Plaintiff argues that, in so doing,
Commerce incorrectly benchmarked respondents’ electricity rates,
thereby “vastly overstat[ing] the calculated net benefit” to the
Plaintiff22 and “effectively appli[ng] an adverse inference to
[Plaintiff], over and above applying the intended adverse
inference to the GOC.”23 Defendant and Defendant-Intervenors
counter that Commerce’s determination was supported by
substantial evidence and in accordance with law because
Commerce’s benchmark selection was based on a reasonable reading
of the record evidence and Plaintiff was not impermissibly
affected by the application of adverse inferences to the GOC.24
STANDARD OF REVIEW
The court will sustain Commerce’s determination unless
it is “unsupported by substantial evidence on the record, or
otherwise not in accordance with law.”25
Substantial evidence review requires consideration of
“the record as a whole, including any evidence that fairly
21
Id. at 12; see generally id. at 11-15.
22
Id. at 10, 12.
23
Id. at 10, 14-15.
24
Def.’s Mem. in Opp’n to [Pl.’s Br.], ECF No. 30; Resp. Br. of
Clearon Corp. & Occidental Chem. Corp., ECF No. 31.
25
19 U.S.C. § 1516a(b)(1)(B)(i).
Court No. 14-00337 Page 9
detracts from the substantiality of the evidence,”26 and asks, in
light of that evidence, whether Commerce’s determination was
reasonable.27
As relevant here, review for “accordance with law,”
asks, where “Congress directly spoke to the precise question at
issue and clearly expressed its purpose and intent in the
governing statute,” whether the agency’s determination is in
accordance with that statute; or, if Congress has not spoken
directly on the issue, “the agency’s interpretation” is “a
reasonable construction of the statute.”28
DISCUSSION
To calculate the benefit conferred by a
countervailable subsidy, Commerce compares a benchmark price to
the price actually paid by the respondent.29 Here, drawing an
adverse inference against the GOC, Commerce selected, from the
26
Gallant Ocean (Thailand) Co. v. United States, 602 F.3d 1319,
1323 (Fed. Cir. 2010) (internal quotation marks and citation
omitted).
27
Nippon Steel Corp. v. United States, 458 F.3d 1345, 1351 (Fed.
Cir. 2006).
28
Yangzhou Bestpak Gifts & Crafts Co. v. United States, 716
F.3d 1370, 1377 (Fed. Cir. 2013) (citing Chevron, U.S.A., Inc.
v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842–43
(1984)).
29
19 U.S.C. § 1677(5)(E); 19 C.F.R. § 351.511(a)(2)(i); see Fine
Furniture, 748 F.3d at 1370.
Court No. 14-00337 Page 10
facts available on the record, the large industry rates from
Zhejiang province for the benchmark, because those rates were
the “highest electricity rates on [the] record” for the
“applicable rate and user categories.”30 Because respondents
were cooperative, Commerce relied on the respondent’s own
records, “to the extent [they were] usable and verifiable,” to
determine their actual electricity consumption and rates paid.31
In comparing the two sets of rates, Commerce
determined that the Zhejiang province electricity schedule was a
three-tier pricing system, with rates varying by time of usage.32
Jiheng reported its electricity consumption and rates based on
30
Final I&D Mem., supra note 1, at 10; Prelim. Benchmark Mem.,
ECF No. 30-1 at Tab 4, at 1, attach. 1 (electricity benchmark
table); Zhejiang Electricity Schedule, ECF No. 30-1 at Tab 2 at
Ex. E2-3.
31
See Final I&D Mem., supra note 1, at 21 (citation omitted).
32
Final I&D Mem., supra note 1, at 30-31; Prelim. Benchmark
Mem., ECF No. 30-1 at Tab 4, at attach. 1 (electricity benchmark
table). That is, the Zhejiang Electricity Schedule provides (1)
“Sharp Price” (also translated as “Critical Peak,” charged from
19:00 to 21:00 each day); (2) “Peak Price” (charged from 08:00
to 11:00, 13:00 to 19:00, and 21:00-22:00 each day); and (3)
“Off-Peak Price” (also translated as “Valley,” charged from
11:00 to 13:00 and 22:00 to 08:00 the following day). Zhejiang
Electricity Schedule, ECF No. 30-1 at Tab 2 at Ex. E2-3.
Commerce, “[b]ased on past practice, and [its] understanding of
the PRC’s multi-tiered electricity system,” has “consistently
interpreted these labels, including slightly varied translations
thereof, to be a three-tiered ‘valley, normal, and peak’ rate
structure and selected the highest rates from the ‘sharp’
category for the ‘peak’ benchmark rate.” Final I&D Mem., supra
note 1, at 31 (footnote and citations omitted).
Court No. 14-00337 Page 11
the Southern Hebei electricity schedule, which has a four-tier
pricing system.33 To adjust for this difference, Commerce
aligned the lowest rate from Zhejiang (“Off Peak”) with the
lowest rate from Southern Hebei (“Valley”), the next highest
rate in Zhejiang (“Peak”) with the next highest rate in Southern
Hebei (“Normal”), and the highest rate in Zhejiang (“Sharp”)
with the next highest rate in Southern Hebei (“Peak”).34 Then,
lacking a fourth Zhejiang rate, Commerce used the actual
Southern Hebei “High Peak” for the benchmark.35
I. The Zhejiang “Four-Tier” Electricity Schedule
Plaintiff first argues that Commerce’s determination
is incorrect because the agency “misinterpreted the Zhejiang
33
That is: (1) “High Peak”; (2) “Peak”; (3) “Normal”; and
(4) “Valley.” GOC’s Initial Questionnaire Resp., Chlorinated
Isocyanurates from the [PRC], C-570-991, Investigation (Dec. 20,
2013) at Ex. E2-3 (Electricity Sales Schedule of Southern Hebei
Power Grid), reproduced in [Pl.’s] App., ECF Nos. 26 (conf.
ver.) & 27 (pub. ver.) at Tab 4; Section III Resp. of [Jiheng],
Chlorinated Isocyanurates from the [PRC], C-570-991,
Investigation (Dec. 23, 2013), reproduced in [Pl.’s] App., ECF
Nos. 26 & 27 at Tab 3 (“Jiheng Section III Resp.”) at app. 26
(Electricity Template of Hebei Jiheng) (“Jiheng Electricity
Template”) (reporting Jiheng’s electricity consumption on the
Southern Hebei four-tier schedule with high peak, peak, normal,
and valley).
34
See Prelim. Benchmark Mem., ECF No. 30-1 at Tab 4, at
attach. 1; Final I&D Mem., supra note 1, at 30-31.
35
See Prelim. Benchmark Mem., ECF No. 30-1 at Tab 4, at
attach. 1 (providing the “S[outhern] Hebei” rate as the
benchmark for each of the “High Peak” rates).
Court No. 14-00337 Page 12
electricity schedule” as a three-tier rather than four-tier
pricing system and thereby “vastly overstated the net benefit
attributable” to Plaintiff.36 Plaintiff claims that “Commerce
totally ignored” the presence of the “KWH Electricity Tariff” in
the Zhejiang electricity schedule.37 Plaintiff asserts that the
KWH Electricity Tariff “corresponds to the ‘Normal’ price
category in the Southern Hebei electricity schedule” because it
applies in Zhejiang “when the three time-period rates [are] not
[otherwise] applicable.”38 This, according to Plaintiff, proves
that “the Zhejiang schedule, just like the Southern Hebei
schedule, was, i[n] fact, a four-tiered price system.”39
Commerce did not, however, “totally ignore” the
Zhejiang KWH Electricity Tariff, but rather, considering the
record evidence and reasonable inferences therefrom,40 expressly
declined to adopt Plaintiff’s interpretation of the Zhejiang
rate schedule. Commerce found “no basis to assume that the KWH
36
Pl.’s Br., ECF No. 25-2, at 6, 10; see generally id. at 5-11.
37
Id. at 6.
38
Id.
39
Id.
40
See Matsushita Elec. Indus. Co. v. United States, 750 F.2d
927, 933 (Fed. Cir. 1984) (“More specifically, [under the
substantial evidence standard] the question . . . is whether the
evidence and reasonable inferences from the record support
[Commerce’s finding].”).
Court No. 14-00337 Page 13
Electricity Tariff would be representative of a normal rate.”41
Indeed, as Commerce points out, the Zhejiang rate schedule
provides no explanation or definition of what the KWH
Electricity Tariff is or when it applies.42 Further, the three-
tier schedule, not including the KWH Electricity Tariff, covers
all 24 hours of the day.43
Plaintiff’s attempt at defining the KWH Electricity
Tariff brings much heat but no light to the issue. Plaintiff
makes various conclusory statements,44 argumentative
41
Final I&D Mem., supra note 1, at 31.
42
See Zhejiang Electricity Schedule, ECF No. 30-1 at Tab 2 at
Ex. E2-3; Final I&D Mem., supra note 1, at 31 (noting that the
“record is silent as to what the KWH Electricity Tariff
represents” and that it is “unclear as to what time period the
KWH Electricity Tariff covers,” leaving Commerce “no basis to
assume that the KWH Electricity Tariff would be representative
of a normal rate”).
43
See Zhejiang Electricity Schedule, ECF No. 30-1 at Tab 2 at
Ex. E2-3; Final I&D Mem., supra note 1, at 31.
44
Plaintiff claims that the Zhejiang KWH Electricity Tariff is
used “when the three time-period rates [on the Zhejiang
schedule] [are] not applicable.” Pl.’s Br., ECF No. 25-2, at 6.
From this, Plaintiff concludes that “the Zhejiang schedule, just
like the Southern Hebei schedule, [is], i[n] fact, a four-tiered
price system.” Id. “In fact” is a curious choice of words,
given that Plaintiff offers no evidence on the record to support
this position. Plaintiff offers only a re-reading of the
Zhejiang schedule that is more to its liking. Plaintiff
believes that the “Zhejiang schedule clearly provides four
tariff rates” because the KWH Electricity Tariff “is placed in a
column right next to the prices of Sharp, Peak and Off-Peak
tariff rates,” id. at 8 (citation omitted), its use as the
benchmark for “normal” would present a better numerical
progression, id. at 7-8, and it is the “only tariff rate
(footnote continued)
Court No. 14-00337 Page 14
pronouncements,45 and declarations of irrelevant facts.46 As
such, Plaintiff accomplishes the ironic effect of supporting not
applicable” to some types of users, id. at 9. “Necessarily,”
Plaintiff says, “the [Zhejiang] KWH Electricity Tariff . . . is
applicable in all cases where the other three rates are not
applicable.” Id. at 8. But there is nothing necessary about
this conclusion. The Zhejiang electricity rate schedule does
not define the “KWH Electricity Tariff,” See Zhejiang
Electricity Schedule, ECF No. 30-1 at Tab 2 at Ex. E2-3, and
Plaintiff points to nothing on the record to suggest that it
applies as a “normal rate” to users in Zhejiang province.
Plaintiff only provides an alternative, unsubstantiated
interpretation. This is not enough for this Court to remand to
Commerce. “[T]he possibility of drawing two inconsistent
conclusions from the evidence does not prevent an administrative
agency’s finding from being supported by substantial evidence.”
Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966) (citations
omitted).
45
Plaintiff argues that Commerce’s statement that “‘there is no
evidence [on the record to demonstrate] that [this] is a higher
rate than “peak,”’” Pl.’s Br., ECF No. 25-2, at 8 (misquoting
Final I&D Mem., supra note 1, at 31), is “preposterous,” because
“Commerce’s own benchmark includes a ‘High Peak’ category” and
“the Southern Hebei electricity schedule . . . contains a ‘sharp
peak’ or ‘high peak’ rate that is higher than the ‘peak’ rate,”
id. However, Commerce’s statement is only “preposterous” when
quoted out of context, as Plaintiff’s counsel has done.
Commerce was not discussing the Southern Hebei schedule or even
its benchmarks in this investigation, but rather its practice of
using a three-tier benchmark pricing schedule, with “peak” being
the generic label for the highest rate, regardless of the
vagaries of translation. Final I&D Mem., supra note 1 at 31
(“Based on past practice, and [Commerce’s] understanding of the
PRC’s multi-tiered electricity system, [Commerce has]
consistently interpreted [the Zhejiang labels of ‘sharp, peak,
and off-peak’ or ‘critical peak, peak, and valley’], including
slightly varied translations thereof, to be a three-tiered
‘valley, normal, and peak’ rate structure and selected the
highest rates from the ‘sharp’ category for the ‘peak’ benchmark
rate. Moreover, we note that apart from the reference to a
‘critical peak’ period, there is no evidence on the record to
demonstrate that this is a higher rate than ‘peak.’”) (footnote
(footnote continued)
Court No. 14-00337 Page 15
its own position but Commerce’s determination that “the record
is silent as to what the KWH Electricity Tariff represents.”47
Commerce’s determination is not rendered “mistaken”48
“faulty,”49 “untenable,”50 “preposterous,”51, or “nonsensical,”52
simply because Plaintiff’s counsel says it is. If Plaintiff
thought Commerce’s three-tier interpretation incorrect, it
should have developed the administrative record with information
and citations omitted).
46
Plaintiff asserts that its “reported electricity consumptions
under the ‘Normal’ tariff rate of the Southern Hebei electricity
schedule . . . is approximately equal to the monthly electricity
consumptions reported under the Peak and Valley tariff rates,
and is several time[s] larger than the monthly electricity
consumptions under the Sharp tariff rate.” Pl.’s Br., ECF No.
25-2, at 9 (citations omitted). “Accordingly,” Plaintiff’s
counsel asserts, “consumption under the [Zhejiang] KWH
electricity Tariff should similarly be expected.” Id.
Plaintiff’s counsel would have the court infer that, based on
Jiheng’s own consumption under the Southern Hebei schedule, the
“KWH Electricity Tariff under the Zhejiang electricity schedule
is a separate rate whose application is not limited by any time
period . . . [and] used in instances when [the] Sharp[,] Peak
and Off Peak tariffs are present, but not applicable.” Id. This
is a non sequitur. Plaintiff’s own consumption under the
Southern Hebei schedule has no bearing on what the Zhejiang KWH
Electricity Tariff is or when it applies. It is irrelevant.
47
Final I&D Mem., supra note 1, at 31.
48
Pl.’s Br., ECF No. 25-2, at 6.
49
Id. at 7.
50
Id.
51
Id. at 8.
52
Id. at 8, 9.
Court No. 14-00337 Page 16
supporting its own four-tier interpretation.53 More importantly,
the question for this Court is whether Commerce’s determination
is supported by “such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion,”54 not whether
Plaintiff can provide some argument for a preferred rate.55
Because Commerce has articulated a reasonable and rational
connection between the facts on the record and the choices the
agency has made, its reading of the Zhejiang electricity pricing
schedule is supported by substantial evidence.56
53
QVD Food Co. v. United States, 658 F.3d 1318, 1324 (Fed. Cir.
2011) (“[T]he burden of creating an adequate record lies with
[interested parties] and not with Commerce.”) (second alteration
original, quotation marks and citations omitted); US Magnesium
LLC v. United States, __ CIT __, 70 F. Supp. 3d 1321, 1328
(2015) (“If [Plaintiff] believed [that Commerce made] a poor
choice, [Plaintiff] should have developed the administrative
record with information substantiating its inference . . . .”)
(citation omitted).
54
Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951)
(quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).
55
See Consolo, 383 U.S. at 620; Daewoo Elecs. Co. v. Int’l Union
of Elec., Elec., Tech., Salaried & Mach. Workers, AFL-CIO, 6
F.3d 1511, 1520 (Fed. Cir. 1993) (“[Under the substantial
evidence standard], [t]he question is whether the record
adequately supports the decision of the [agency], not whether
some other inference could reasonably have been drawn.”).
56
Cf. Burlington Truck Lines, Inc. v. United States, 371 U.S.
156, 168 (1962) (finding an agency determination unsupported by
substantial evidence because the agency did not “articulate any
rational connection between the facts found and the choice
made”).
Court No. 14-00337 Page 17
II. The Zhejiang Schedule “Large Industry” v. “Large Industry
(Chlor-Alkali)” Rates
Second, Plaintiff argues that Commerce’s use of the
Zhejiang rates for large industry, rather than the (lower)
Zhejiang rates for “the production of chlor-alkali products,”
resulted in a calculation that “vastly overstated the net
benefit” to Plaintiff,57 and thereby made the application of AFA
“excessive” and “contrary to Commerce’s stated intention of
limiting [the application of adverse facts] to the GOC.”58
Commerce, however, has broad “discretion to choose
which sources and facts it will rely on to support an adverse
inference when a respondent has been shown to be
uncooperative.”59 The statute is unambiguous on this point.60 In
applying adverse inferences Commerce is authorized to look to
“any . . . information placed on the record,” to fill the gaps
in its data,61 so long as Commerce’s determination remains in
57
Pl.’s Br., ECF No. 25-2, at 12; Reply Br. of [Jiheng],
ECF No. 36 (“Pl.’s Reply”), at 11-16.
58
Pl.’s Br., ECF No. 25-2, at 15; Pl.’s Reply, ECF No. 36,
at 16-17.
59
See F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v. United
States, 216 F.3d 1027, 1032 (Fed. Cir. 2000).
60
See Nan Ya Plastics Corp. v. United States, No. 2015-1054,
2016 WL 209915, at *8-9 (Fed. Cir. Jan. 19, 2016).
61
19 U.S.C. § 1677e(b)(4).
Court No. 14-00337 Page 18
accordance with law and reasonable in light of the record
evidence.62
Here, Commerce’s application of adverse inferences is
in accordance with law because it is “consistent with the method
provided in the statute.”63 Specifically, an adverse inference
in a CVD investigation may have “a collateral impact on a
cooperating party,” without being rendered “improper.”64 Where,
as here, an adverse inference made against the GOC “collaterally
reaches” a cooperating company that is “within the [PRC],
benefitting directly from subsidies the [GOC] may be providing,”
then the adverse inference is permissible, because it “has the
62
See Nan Ya, 2016 WL 209915, at *7 (citing 19 U.S.C. §
1516a(b)(1)(B)(i)). Commerce’s application of adverse
inferences must be reasonably accurate, see Mueller Comercial de
Mexico, S. de R.L. de C.V. v. United States, 753 F.3d 1227, 1234
(Fed. Cir. 2014), and tied to “commercial reality,” Gallant
Ocean, 602 F.3d at 1323. But, contrary to Plaintiff’s
understanding, “a Commerce determination (1) is ‘accurate’ if it
is correct as a mathematical and factual matter, thus supported
by substantial evidence; and (2) reflects ‘commercial reality’
if it is consistent with the method provided in the statute,
thus in accordance with law.” Nan Ya, 2016 WL 209915, at *7
(citations omitted); see Fine Furniture, 748 F.3d at 1373 (“[19
U.S.C. § 1677e(b)] authorize[es] Commerce to provide a
reasonable estimate based on the best facts available,
accompanied by a reasonable adverse inference used in place of
missing information . . . .”).
63
See Nan Ya, 2016 WL 209915, at *7.
64
Fine Furniture, 748 F.3d at 1372 (citing KYD, Inc. v. United
States, 607 F.3d 760, 768 (Fed. Cir. 2010)).
Court No. 14-00337 Page 19
potential to encourage the [GOC] to cooperate so as not to hurt
its overall industry.”65
Further, Commerce’s determination is supported by
substantial evidence because it is based on a reasonable reading
of the record evidence.66 Commerce selected the “highest, non-
specific electricity rates for the appropriate user categories”
on the record, that is, actual electricity rates, as provided by
the GOC, charged to users comparable to respondents during the
relevant time period.67
Contrary to Plaintiff’s arguments,68 Commerce
reasonably declined to use the chlor-akali subset of large
65
Fine Furniture, 748 F.3d at 1373.
66
See Nan Ya, 2016 WL 209915, at *7; Nippon Steel, 458 F.3d
at 1351.
67
See Final I&D Mem., supra note 1, at 30; Prelim. Benchmark
Mem., ECF No. 30-1 at Tab 4, at 1, attach. 1 (electricity
benchmark table); Zhejiang Electricity Schedule, ECF No. 30-1 at
Tab 2 at Ex. E2-3.
68
Plaintiff argues that because it is “in the chlor-alkali
business,” Pl.’s Br., ECF No. 25-2, at 12, and because “Commerce
has made no finding that the chlor-alkali rates in the Zhejiang
. . . schedule constitute a countervailable subsidy or that they
provide a specific benefit to an industry or a group of
industries under 19 U.S.C. § 1677(5A),” Pl.’s Reply, ECF No. 36,
at 14, there is “no basis to disqualify the Zhejiang chlor[-
]alkali electricity rates as benchmarks for Jiheng’s consumption
of electricity,” id., and Commerce must, therefore, use them as
the benchmarks in its benefit calculation, Pl.’s Br., ECF No.
25-2, at 14; Pl.’s Reply, ECF No. 36, at 16. But Commerce is
under no such obligation. 19 U.S.C. § 1677e(b)(4) (Commerce may
use “any . . . information placed on the record.”); see Nan Ya,
2016 WL 209915, at *8-11.
Court No. 14-00337 Page 20
industry rates from Zhejiang, despite Plaintiff’s status as a
chlor-alkali “producer,”69 because “the GOC’s refusal to respond
to [Commerce’s] questions” regarding the GOC’s electricity
pricing practices “rendered the provincial electricity rates
unreliable.”70 Commerce found that the chlor-akali rates were “a
preferential electricity rate specific to [the chlor-alkali]
industry,” making its selection inconsistent with adverse
inferences.71 Accordingly, Commerce used the Zhejiang large
industry rates as a “reasonably accurate estimate of
[Plaintiff’s] actual [electricity] rate[s], albeit with some
built-in increase intended as a deterrent to [the GOC] for
69
See Pl.’s Br., ECF No. 25-2, at 12.
70
Final I&D Mem., supra note 1, at 31.
71
Id. at 32. Plaintiff itself concedes that the rate is
“preferential.” Pl.’s Br., ECF No. 25-2, at 12 (noting that, on
the Southern Hebei Electricity Schedule, its rate is translated
as “preferential” (citing Jiheng Electricity Template, ECF Nos.
26 & 27 at Tab 3, at app. 26), and that the chlor-alkali rates
on the Zhejiang Electricity Schedule are “the same or
comparable”); see also Pl.’s Reply, ECF No. 36, at 14-16.
Plaintiff tries to argue that this preference is the result of
“well-established market principles,” Pl.’s Reply, ECF No. 36,
at 15. This argument is unconvincing because Plaintiff can
marshal no more support for it than “perhaps the most overused
phrase in retail, ‘the more you buy, the more you save.’” Id.
Further, Plaintiff provides, by its own submission on the
record, that the chlor-alkali process is not a distinct
industry, but an electricity-intensive step in the production of
chloro isocyanurates (SDIC and TCCA) (i.e., implicating both the
subsidized good and industry at issue here). See Jiheng Section
III Resp., ECF Nos. 26 & 27 at Tab 3, at app. 3 (providing an
outline of the chlor-akali stage in the production of
chlorinated isocyanurates).
Court No. 14-00337 Page 21
noncompliance.”72 Such an adverse inference is supported by
substantial evidence.73
CONCLUSION
For these reasons, Commerce’s determination in
Chlorinated Isocyanurates from the [PRC], 79 Fed. Reg. 56,560(Dep’t Commerce Sept. 22, 2014) (final affirmative
countervailing duty determination; 2012) is supported by
substantial evidence and in accordance with law, and is
therefore AFFIRMED. Judgment will be issued accordingly.
/s/Donald C. Pogue
Donald C. Pogue, Senior Judge
Dated: February
New York, NY
72
See Mueller Comercial, 753 F.3d at 1234 (quoting F.lli De
Cecco, 216 F.3d at 1032); Fine Furniture, 748 F.3d at 1373.
73
See Fine Furniture, 748 F.3d at 1373.