Zhaoqing New Zhongya Aluminum Co. v. United States , 70 F. Supp. 3d 1298 ( 2015 )

Slip Op. 15-50
UNITED STATES COURT OF INTERNATIONAL TRADE
________________________________
ZHAOQING NEW ZHONGYA ALUMINUM :
CO., LTD., :
:
Plaintiff, : Before: Nicholas Tsoucalas,
: Senior Judge
v. :
: Court No.: 14-00043
UNITED STATES, :
: PUBLIC VERSION
Defendant, :
:
And :
:
ALUMINUM EXTRUSIONS FAIR TRADE :
COMMITTEE, :
:
Defendant-Intervenor. :
_____________________ :
OPINION
[Plaintiff’s Motion for Judgment on the Agency Record is DENIED.
Commerce’s Final Results of the Administrative Review are
AFFIRMED.]
Dated:________________
May 27, 2015
Peter J. Koenig, Squire Patton Boggs (US), LLP, of Washington, DC,
for Plaintiff.
Douglas G. Edelschick, Trial Attorney, Commercial Litigation
Branch, Civil Division, Department of Justice, of Washington DC,
for Defendant. With him on the brief were Tara K. Hogan, Senior
Trial Counsel, Commercial Litigation Branch, Civil Division,
Department of Justice, Joyce R. Branda, Acting Assistant Attorney
General, Jeanne E. Davidson, Director, and Reginald T. Blades,
Jr., Assistant Director. Of counsel on the brief was Rebecca
Cantu, Senior Attorney, Office of the Chief Counsel for Enforcement
and Compliance, Department of Commerce, of Washington, DC.
Court No. 14-00043 Page 2
Alan H. Price and Robert E. DeFrancesco, III, Wiley Rein, LLP, of
Washington, DC, for Defendant-Intervenor.
Tsoucalas, Senior Judge: Plaintiff, Zhaoqing New
Zhongya Aluminum Co., Ltd., (“Zhongya”) moves for judgment on the
agency record contesting Defendant United States Department of
Commerce’s (“Commerce”) determination to collapse into a single
entity three affiliated exporters/producers, the Guang Ya group
(“Guang Ya”), Zhongya, and Xinya, in Aluminum Extrusions From the
People’s Republic of China: Final Results of Antidumping Duty
Administrative Review and Rescission in Part 2010/12 (“Final
Results of Administrative Review”), 79 Fed. Reg. 96 (Jan. 2, 2014).
Commerce and Defendant-Intervenor, Aluminum Extrusions Fair Trade
Committee, oppose Zhongya’s motion. For the following reasons,
Zhongya’s motion is denied and the Final Results of Administrative
Review are affirmed.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction over this action pursuant to
section 201 of the Customs Courts Act of 1980, 28 U.S.C. §
1581(c)(2012) and section 516 of the Tariff Act of 1930, 19 U.S.C.
§ 1516a(a)(2) (2012). 1
1
Further citations to the Tariff Act of 1930 are to the relevant
portions of Title 19 of the U.S. Code, 2012 edition, and all
applicable amendments thereto.
Court No. 14-00043 Page 3
In reviewing a challenge to Commerce's final
determination in an antidumping administrative review, the Court
will uphold Commerce's determination unless it is “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 means “more than a mere scintilla”
of “such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” Universal Camera Corp. v. NLRB,
340 U.S. 474, 477, 71 S. Ct. 456, 459, 95 L. Ed. 456, 462 (1951)
(quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S. Ct.
206, 217, 83 L. Ed. 126, 140 (1938)). To determine if substantial
evidence exists, the court reviews the record as a whole, including
whatever “fairly detracts from its weight.” Id. at 488, 71 S.Ct.
at 464, 95 L. Ed. at 467. The mere fact that it may be possible to
draw two inconsistent conclusions from the record does not prevent
Commerce's determination from being supported by substantial
evidence. Am. Silicon Techs. v. United States, 261 F.3d 1371,
1376 (Fed. Cir. 2001); see also Consolo v. Fed. Mar. Comm'n, 383
U.S. 607, 620, 86 S. Ct. 1018, 1026, 16 L. Ed. 2d 131, 141 (1966).
BACKGROUND
This case concerns the first administrative review of
the outstanding 2011 antidumping duty order on aluminum extrusions
from the People’s Republic of China (“PRC”) for the period of
review covering November 12, 2010, through April 30, 2012.
Court No. 14-00043 Page 4
Final Results of Administrative Review, 79 Fed. Reg. at 96; Issues
and Decision Memorandum for Final Results of Antidumping Duty
Administrative Review: Aluminum Extrusions from PRC, A-570-967,
(Jan. 2, 2014) (“Antidumping IDM”); Aluminum Extrusions from the
PRC: Antidumping Duty Order, 76 Fed. Reg. 30,650 (May 26, 2011).
On April 4, 2011, Commerce published its final
determination of sales at less than fair value for Aluminum
Extrusions from the PRC. Aluminum Extrusions From the PRC: Final
Determination of Sales at Less Than Fair Value (“Final
Determination of Sales at LTFV”), 76 Fed. Reg. 18,524 (Apr. 4,
2011). Commerce investigated three Chinese producers of aluminum
extrusions: Zhongya, Guang Ya, and Xinya. Id.
Commerce found that Guang Ya, Zhongya, and Xinya were
affiliated pursuant to 19 U.S.C. 1677 (A) and (F) and collapsed
the three entities into a single entity based upon the claim that
each entity was owned by a member of the Kwong family. Id. at
18,526-27. Commerce determined that the single entity was eligible
for a separate rate and that the use of adverse facts available
(“AFA”) was warranted for both the Guang Ya, Zhongya, Xinya, entity
and the PRC wide entity. Id. at 18,527-29.
On April 4, 2011, Commerce also published the Final
Determination of a countervailing duty investigation of Guang Ya,
Zhongya, and Xinya. Aluminum Extrusions From the PRC: Final
Affirmative Countervailing Duty Determination (“Final CVD
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Determination”) 76 Fed. Reg. 18,521 (Apr. 4, 2011); Issues and
Decision Memorandum for the Final Determination in the CVD
Investigation of Aluminum Extrusions from the PRC, C-570-968,
(Mar. 28, 2011) (“IDM for CVD investigation”). In the Final CVD
Determination, Commerce did not collapse Guang Ya, Zhongya, and
Xinya, reasoning that there was no cross-ownership among the
companies. IDM for CVD investigation at 58.
With respect to the antidumping investigation, Commerce
concluded that the margin of 33.28% had probative value for the
purpose of being selected as the AFA rate assigned to the Guang
Ya, Zhongya, Xinya entity and the China-wide entity. Final
Determination of Sales at LTFV, 76 Fed. Reg. at 18,530. In the
investigation, Commerce found that a fourth company, Da Yang, owned
and managed by another Kwong family sibling, was uncooperative and
so subject to the China-wide rate and not collapsed with Zhongya,
Guang Ya, and Xinya. Aluminum Extrusions From the PRC Notice of
Preliminary Determination of Sales at Less Than Fair Value, and
Preliminary Determination of Targeted Dumping (“Preliminary
Determination of Sales at LTFV”) 75 Fed. Reg. 69,403, 69,408 (Nov.
12, 2010).
This Court affirmed Commerce’s decision to collapse the
entities in the antidumping investigation on October 11, 2012, and
Zhongya appealed to the Court of Appeals for the Federal Circuit
(“CAFC”). Zhaoqing New Zhongya Aluminum Co., Ltd. v. United
Court No. 14-00043 Page 6
States, 36 CIT ___, Slip Op. 12-130, 887 F. Supp. 2d 1301, 1311
(Oct. 11, 2012); Zhaoqing New Zhongya Aluminum Co., Ltd. v. United
States, Appeal No. 13-1113 (Fed. Cir. June 18, 2013) (not reported
in Federal Supplement). The CAFC dismissed the appeal on June
18, 2013. Id.
Commerce initiated the administrative review on July 10,
2012. Initiation of Antidumping and CVD Administrative Reviews
and Request for Revocation in Part, 77 Fed. Reg. 40,565 (July 10,
2012). On January 2, 2014, Commerce published the Final Results
of the Antidumping Duty Administrative Review and Rescission for
Aluminum Extrusions from the PRC. Final Results of Administrative
Review, 79 Fed. Reg. at 96. Commerce again collapsed Zhongya,
Guang Ya Group, and Xinya into a single entity. Id. at 97.
Additionally, Commerce found that the collapsed entity “failed to
demonstrate that it was eligible for a separate rate and thus it
is part of the PRC-wide entity.” Id. Commerce assigned the
collapsed entity a 33.28% weighted average dumping margin. Id. at
100. Commerce collapsed the three companies claiming that each
was owned and/or managed by a sibling or a sibling-in-law of the
Kwong family. Antidumping IDM at 19.
Commerce justified collapsing the three companies in its
Final Results of Administrative Review while rejecting Zhongya’s
arguments against collapsing. Id. at 15-21. Commerce determined
that 19 C.F.R. § 351.401(f) controls the collapsing analysis and
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that “Zhongya/Guang Ya Group/Xinya is not eligible for a separate
rate and is part of the PRC-wide entity.” Final Results of
Administrative Review, 79 Fed. Reg. at 99; see also Antidumping
IDM at 15. Commerce found that the Zhongya, Guang Ya, Xinya entity
is not eligible for a separate rate, because Xinya did not answer
any of Commerce’s questionnaires including the quantity, value,
and separate rate questionnaires, and Guang Ya did not answer the
main or separate rate questionnaires. Antidumping IDM at 23.
Zhongya disputes Commerce’s decision in the antidumping
administrative review to collapse and treat as one entity Zhongya,
Guang Ya, and Xinya. Pl.’s Mem. J. on R. at 1, Aug. 11, 2014, ECF
No. 28 (“Pl.’s Br.”).
DISCUSSION
1. 19 C.F.R. § 351.401 (f) controls the collapsing analysis
Zhongya argues that the antidumping statute authorizes
collapsing only if producers and exporters jointly produce the
same subject merchandise under 19 U.S.C. § 1677(28). 2 Pl.’s Br.
2
19 U.S.C. § 1677(28) reads as follows:
The term “exporter or producer” means the exporter of
the subject merchandise, the producer of the subject
merchandise, or both where appropriate. For purposes of
section 1677b of this title, the term “exporter or
producer” includes both the exporter of the subject
merchandise and the producer of the same subject
merchandise to the extent necessary to accurately
calculate the total amount incurred and realized for
costs, expenses, and profits in connection with
production and sale of that merchandise.
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at 5. Zhongya further contends that Zhongya, Guang Ya, and Xinya
do not jointly produce the same subject merchandise; therefore,
Commerce improperly collapsed the companies. Id. Zhongya relies
on AK Steel Corp. v. United States to support its argument. AK
Steel Corp. v. United States, 22 CIT 1070, 1080, 34 F. Supp. 2d
756, 765 (1998), rev’d on other grounds, 226 F.3d 1361 (Fed. Cir.
2000). Commerce maintains that the language of § 1677(28) is not
intended to address collapsing issues. Def.’s Mem. in Opp’n to
Pl.’s Rule 56.2 Mot. for J. on the Agency R. at 24, Feb. 13, 2015,
ECF No. 39 (“Def.’s Br.”). Commerce posits instead that 19 C.F.R.
§ 351.401 (f) controls the collapsing analysis. Id. at 25.
19 C.F.R. § 351.401 (f) provides that Commerce may
collapse affiliated producers where there “is a significant
potential for the manipulation of price or production.” 19 C.F.R.
§ 351.401 (f)(1) (2014). In determining whether there is a
significant potential for manipulation Commerce considers the
following factors: (i) the level of common ownership; (ii) the
extent to which managerial employees or board members of one firm
sit on the board of directors of an affiliated firm; and (iii)
whether operations are intertwined, such as through the sharing of
sales information, involvement in production and pricing
decisions, the sharing of facilities or employees, or significant
transactions between the affiliated producers. 19 C.F.R. § 351.401
(f).
Court No. 14-00043 Page 9
Zhongya misinterprets the Court’s holding in AK Steel
Corp., 22 CIT at 1080, 34 F. Supp.2d at 764-65. Although the Court
in AK Steel Corp. noted that § 1677(28) leaves Commerce the
discretion to collapse, it also recognized that “there is no
explicit reference to collapsing in the legislative history [of 19
U.S.C. § 1677].” Id. In AK Steel Corp., the Court found that
Commerce previously published proposed rules to incorporate the
Uruguay Round Agreements Act amendments in 1996, which included a
codification of Commerce’s collapsing practice. Id. at n.22. The
proposed rule became codified in 19 C.F.R. § 351.401(f). Id. This
court finds that 19 C.F.R. § 351.401(f) controls the collapsing
analysis in the instant case, because the rule regarding collapsing
is codified in 19 C.F.R. § 351.401(f).
2. Affiliation
Commerce may collapse entities where the entities are
affiliated. 19 C.F.R. § 351.401 (f)(1). “‘Affiliated persons’
and ‘affiliated parties’ have the same meaning as in section
771(33) of the Act [19 U.S.C. § 1677(33)]”. Ta Chen Stainless
Steel Pipe Ltd. v. United States, 23 CIT 804, 808 (1999) (not
reported in Federal Supplement), aff’d, 298 F.3d 1330 (Fed. Cir.
2002). Commerce may find that “[t]wo or more persons directly or
indirectly controlling, controlled by, or under common control
with, any person” are affiliated under subsection (F) of 19 U.S.C.
§ 1677(33). 19 U.S.C. § 1677(33) (F). Prior case law has approved
Court No. 14-00043 Page 10
a finding of company affiliation on the basis of ownership by a
single family under subsection (F). Ferro Union, Inc. v. United
States, 23 CIT 178, 194-95, 44 F. Supp. 2d 1310, 1326 (1999). In
cases where affiliation is found on the basis of ownership by a
single family, Commerce makes the legitimate choice to treat the
family grouping as a “person” under subsection (F). Id. at 194-
95, 44 F. Supp. 2d at 1326.
Zhongya argues that Commerce erroneously found that the
companies were affiliated under § 1677(33)(F), because Commerce’s
treatment of a family grouping as a person is contrary to law.
Pl.’s Br. at 27. Zhongya contends that the decision in Ferro Union
Inc. does not demonstrate that the singular “person” in the statute
needs to be interpreted in the plural to facilitate statutory
intent. Pl.’s Br. at 28; see also Ferro Union Inc. v. United
States, 23 CIT 178, 194, 44 F. Supp. 2d 1310, 1326 (1999).
Contrary to Zhongya’s assertion, the decision in Ferro
Union Inc. supports the proposition that the singular person in
the statute can be interpreted in the plural to facilitate
statutory intent. Ferro Union Inc., 23 CIT at 194, 44 F. Supp.2d
at 1326. As the Court noted in Ferro Union Inc., the intent of 19
U.S.C. § 1677(33) was to identify control exercised through
corporate or family groupings. Id. By interpreting “family” as a
control person, Commerce was giving effect to this intent. Id.
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Thus, Commerce’s treatment of the Kwong family grouping as a person
is not contrary to law. See id.
Zhongya next argues that Commerce’s finding of
affiliation is not supported by substantial evidence, because
Commerce does not cite evidence showing that Zhongya, Guang Ya, or
Xinya has the potential to control any of the others. Pl.’s Br. at
31. According to 19 U.S.C. § 1677(33)(G) “a person shall be
considered to control another person if the person is legally or
operationally in a position to exercise restraint or direction
over the other person.” 19 U.S.C. § 1677(33)(G). To determine
whether control exists Commerce may consider whether “family
groupings” are present; however, Commerce is precluded from
finding control “unless the relationship has the potential to
impact decisions concerning the production, pricing, or cost of
the subject merchandise or foreign like product.” 19 C.F.R. §
351.102(b)(3). Given that the Kwong family grouping owns nearly
[[ ]] of Guang Ya, Zhongya, and Xinya, the court holds that
Commerce’s finding was reasonable. See id. Since the Kwong family
grouping controls the companies, the court finds that Commerce’s
affiliation finding is supported by substantial evidence. See id.
3. Collapsing
Commerce may collapse affiliated producers where there
“is a significant potential for the manipulation of price or
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production.” 19 C.F.R. § 351.401 (f)(1). Zhongya challenges
Commerce’s decision to collapse arguing that there is no
significant potential for the manipulation of price or production.
Pl.’s Br. at 36-46.
In determining whether there is a significant potential
for manipulation Commerce considers the following factors: (i) the
level of common ownership; (ii) the extent to which managerial
employees or board members of one firm sit on the board of
directors of an affiliated firm; and (iii) whether operations are
intertwined, such as through the sharing of sales information,
involvement in production and pricing decisions, the sharing of
facilities or employees, or significant transactions between the
affiliated producers. 19 C.F.R. § 351.401 (f). “These factors
are considered by Commerce in light of the totality of the
circumstances; no one factor is dispositive in determining whether
to collapse the producers.” Koyo Seiko Co. Ltd. v. United States,
31 CIT 1512, 1535, 516 F. Supp. 2d 1323, 1346 (2007) aff’d, 551 F.3d
1286 (2008). “The regulation’s list of factors is non-exhaustive
and merely suggests three factors for Commerce to examine in
establishing potential control.” Catfish Farmers of America v.
United States, 33 CIT 1258, 1266, 641 F. Supp. 2d 1362, 1372 (2009).
Although “common family ownership alone provides an insufficient
basis to collapse entities” such ownership is a “positive indicator
of the significant potential for manipulation.” Id. at 1265, 641
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F. Supp. 2d at 1371. “[T]he existence of the family group, and the
significant controlling ownership by the family members,
reasonably supports Commerce’s collapsing decision.” Id.
Zhongya argues that there is no common ownership among
the collapsed companies, because a different person owns each of
the three companies. Pl.’s Br. at 38. Nevertheless, Commerce
found that the Kwong family grouping holds nearly [[ ]] common
ownership of Guang Ya, Zhongya, and Xinya in its Memorandum for
Preliminary Results and confirmed this finding in its Final Results
of Administrative Review. Decision Memorandum for Preliminary
Results of Antidumping Duty Administrative Review: Aluminum
Extrusions from the PRC 2010/12 at 8, A-570-967, (June 3, 2013);
see also, Antidumping IDM, at 18. The court rejects Zhongya’s
argument, because it ignores the fact that the Kwong family
grouping owns nearly [[ ]] of the three companies, Zhongya,
Guang Ya, and Xinya. See Catfish Farmers, 33 CIT at 1265, 641
F.Supp. 2d at 1371. Such controlling ownership by the Kwong family
members is a positive indicator of the significant potential for
manipulation. See id.
In addressing the second factor, Zhongya argues that no
managerial employees or board members of one firm sits on the board
of directors of another firm. Pl.’s Br. at 39. Even if Zhongya is
correct in this assertion, “there is no applicable precedent that
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requires overlapping boards of directors to support a collapsing
determination. The regulation’s list of factors is non-
exhaustive. . . .” Catfish Farmers, 33 CIT at 1266, 641 F.Supp. 2d
at 1372. Here, members of the Kwong family are managers and
members of the board of directors in all three companies. This
supports a conclusion that there is a significant potential for
manipulation. See id. (finding a significant potential for
manipulation where a family group held senior leadership positions
in the companies at issue). Furthermore, as Commerce points out
in its brief, members of the Kwong family group continued to serve
on the boards of the Guang Ya and Zhongya. Preliminary
Determination Regarding Affiliation and Collapsing at 7-8, A-570-
967, (June 3, 2012). Accordingly, the court finds that a
reasonable reading of the record supports the agency’s finding
that there is a significant potential for manipulation with regards
to the second § 351.401(f)(2) factor.
With regards to the third factor, Zhongya claims that it
had no transactions with Xinya or Guang Ya during the review
period. Pl.’s Br. at 41. Zhongya also “certified that going
forward it will not engage in any such transactions.” Id. Zhongya
further argues that Commerce “found no evidence of [Zhongya’s]
relationships with Asia Aluminum Holdings, New Asia, [Xinya] and
GYG [Guang Ya].” Rec. App. to Pl. Zhongya’s Rule 56.2 Mem. For J.
on the R., Ex. 1, at 7, Verification Report, January 28, 2010, ECF
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No. 29. (“Verification Report”). Zhongya claims that although
there was a transaction between a sibling and a spouse of a
sibling, the transaction was neither an export transaction nor did
it involve the subject merchandise. Pl.’s Br. at 46 n.95. Zhongya
asserts that this transaction involved investing in futures, not
the production or sale of aluminum extrusions. Id.
The Court finds that Zhongya’s arguments are unavailing
for several reasons. First, evidence regarding intertwined
operations during the period of review was limited due to Guang Ya
and Xinya’s failure to cooperate. Antidumping IDM at 20. Commerce
drew a reasonable inference from Guang Ya and Xinya’s lack of
cooperation. See id. Second, there was evidence that Xinya made
payments to Zhongya during the period of investigation. Public
App. to Def.’s Mem. in Opp’n to Pl.’s Rule 56.2 Mot. for J. on
Agency R., P.D. 340, Attach. 1 at 10, Apr. 1, 2013, ECF No. 41.
Third, as Commerce found “[it] is not clear what the nature of
these payments are, as New Zhongya’s accounting books, the
explanation from the minority owner of New Zhongya, and the
explanation from the majority owner of New Zhongya were not
consistent.” Id. Commerce’s intertwined operations analysis is
reasonable, but even assuming arguendo that Commerce failed to
show intertwined operations, no one factor alone is dispositive.
See Koyo Seiko Co., 31 CIT at 1535, 516 F.Supp.2d at 1346 (holding
that Commerce considers these factors “in light of the totality of
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the circumstances.”) In sum, the court finds that Commerce was
reasonable in determining that a significant potential for the
manipulation of price or production exists, as Guang Ya and Xinya
failed to cooperate, and Zhongya failed to adequately explain the
nature of payments made.
Finally, Zhongya presents four other challenges to
Commerce’s decision to collapse the three entities that the court
also finds unavailing. First, Zhongya argues that collapsing to
address possible future manipulation violates the statutory
mandate to calculate current dumping margins. Pl.’s Br. at 9.
The court disagrees, as this Court previously recognized that
“Commerce's discretion to group or define companies arises out of
the ‘basic purposes of the statute—determining current margins as
accurately as possible.’” Fischer S.A. Comercio Industria v.
United States, 36 CIT ___, Slip Op. 12-59 (Apr. 30, 2012).
Second, Zhongya argues that the antidumping statute has
its own mechanisms to address concerns about manipulation without
resorting to collapsing, such as statutory administrative reviews,
statutory certifications, questionnaires, authorized channel
dumping margin rates, and various other provisions. Pl.’s Br. at
12-23. Zhongya notes that where a “statute explicitly provides
remedies for a concern, those are the remedies intended by the
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statute, not unlisted ones, which are not authorized by the
statute.” Id. at 13.
Zhongya’s argument is without merit. The fact that there
are other mechanisms also addressing manipulation does not
preclude Commerce from collapsing if the conditions of 19 C.F.R.
§ 351.401(f) are met. 19 C.F.R. § 351.401(f). The Court held in
Hontex that “[a]lthough the antidumping statute does not expressly
address the issue of collapsing, this court has found Commerce’s
collapsing practice, now found in its regulations, to be a
reasonable interpretation of the statute.” Hontex Enterprises Inc.
v. United States, 27 CIT 272, 289-90, 248 F. Supp. 2d 1323, 1338
(2003). Therefore, Commerce acted in accordance with the
antidumping statute.
Third, Zhongya argues that Commerce’s decision not to
collapse in the CVD investigation is inconsistent with its decision
to collapse in the antidumping investigation. Pl.’s Br. at 23.
When an agency treats two similar transactions differently, an
explanation for the agency’s actions must be forthcoming.
Baltimore Gas & Electric Co. v. Heintz, 760 F.2d 1408, 1418 (4th
Cir. 1985). Zhongya points out that antidumping and CVD
investigations are similar in that there is a concern regarding
shipping through a lower margin company. Pl.’s Br. at 23.
Nevertheless, Commerce contends that there is no inconsistency,
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because antidumping and CVD proceedings involve different analyses
with different criteria and separate remedies. Def.’s Br. at 33-
34. The court finds that there is no inconsistency.
Although Zhongya may be correct in asserting that
antidumping and CVD cases may be similar in that there is a concern
regarding shipping through a lower margin company, Zhongya fails
to appreciate the significant differences between 19 C.F.R. §
351.401(f) and 19 C.F.R. § 351.525(b)(6)(vi) (2014) that led to
different outcomes with respect to the collapsing at issue here.
In an antidumping proceeding where the issue is whether to collapse
two or more companies, the emphasis is on determining the
following: whether the companies are affiliated under the statute;
whether the companies have facilities for similar or identical
products that would not require substantial retooling of either
facility in order to restructure manufacturing priorities; and
whether there is a significant potential for the manipulation of
price or production. 19 C.F.R. § 351.401(f).
In contrast, in a CVD case, the inquiry is limited to
whether there is cross-ownership between the companies, that is,
whether “one corporation can use or direct the individual assets
of the other corporation(s) in essentially the same ways it can
use its own assets.” 19 C.F.R. § 351.525(b)(6)(vi). Different
standards applied to the same facts may reasonably lead to
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different outcomes. Thus, there is no inconsistency between
Commerce’s decision to treat the companies as a single entity in
the antidumping proceeding but not in the CVD investigation.
Ultimately, as discussed above, Commerce’s decision to
collapse the three companies was reasonable, because there was a
significant potential for manipulation.
4. Separate Rate Status
The final issue before the court is whether Commerce
acted appropriately in assigning the collapsed entity the China-
wide rate. Pl.’s Br. at 47. Zhongya insists that “Commerce’s
practice is to treat companies who do not answer its request for
information (e.g., its separate rate questionnaire) as part of the
China-wide entity, and not eligible for collapsing with other
individually reviewed respondents.” Id. Zhongya notes that in
the original investigation of aluminum extrusions from China,
Commerce determined that a fourth company, Da Yang, owned and
managed by another Kwong family sibling, was uncooperative and so
subject to the China-wide rate and not eligible for collapsing
with Zhongya, Guang Ya, and Xinya. Preliminary Determination of
Sales at LTFV, 75 Fed. Reg. at 69,408. Therefore, Zhongya asserts
that “[b]ased on the similar noncooperativeness of Guang Ya and
Xinya in this administrative review, they too should be treated
Court No. 14-00043 Page 20
like Da Yang, given the China-wide rate and not collapsed with
Zhongya.” Pl.’s Br. at 47.
Commerce insists that it “appropriately treated the
Guang Ya Group and Xinya as part of the collapsed entity.”
Antidumping IDM at 21. Additionally, in response to Zhongya’s
argument, Commerce notes that its decision to treat Da Yang as
part of the China-wide entity, was made “prior to the point at
which the Department had acquired the information necessary to
consider whether Zhonyga, the Guang Ya Group and Xinya should be
treated as a single entity pursuant to 19 C.F.R. § 351.401(f).”
Id.; Def.’s Br. at 33. Commerce contends that “allowing parties
to exit the collapsed entity as a consequence of their refusing to
participate would allow manipulation by the parties to obtain a
different rate than the one for the collapsed entity.” Def.’s Br.
at 32.
Commerce’s practice as to nonmarket economy (“NME”)
exporters is to presume that all exporters are under the control
of the central government until they demonstrate an absence of
government control. Air Prods. & Chems. Inc. v. United States, 22
CIT 433, 436, 14 F. Supp. 2d 737, 741 (1998); Sigma Corp. v. United
States, 117 F.3d 1401, 1405 (Fed. Cir. 1997). “Those exporters who
do not respond or fail to prove absence of de jure/de facto control
are assigned the country-wide rate. Therefore, a NME exporter
normally receives one of two rates: either the separate rate for
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which it qualified or a country-wide rate.” Coalition for the
Pres. of Am. Brake Drum and Rotor Aftermkt. Mfrs. v. United States,
23 CIT 88, 107, 44 F. Supp. 2d 229, 248 (1999).
Xinya did not answer any of Commerce’s questionnaires in
this review, including Commerce’s quantity and value and separate
rate questionnaires. Antidumping IDM at 23. Guang Ya did not
answer Commerce’s main questionnaire or Commerce’s separate rate
questionnaire. Id. Commerce collapsed Xinya, Zhongya, and Guang
Ya in the Final Results of Administrative Review and found that
the companies were part of the PRC wide entity. Id. at 15; Final
Results of Administrative Review, 79 Fed. Reg. at 99.
The court holds that Commerce’s collapsing determination
is consistent with its separate rate practice, because allowing
Guang Ya and Xinya to exit the collapsed entity would allow for
manipulation. Also, Commerce’s determination, that Da Yang is
part of the China-wide entity, was made prior to the point at which
Commerce had acquired the information necessary to consider
whether Zhonyga, Guang Ya, and Xinya should be treated as a single
entity pursuant to 19 C.F.R. § 351.401(f). Commerce reviews all
components that constitute the collapsed entity and any response
must include data for all companies that comprise the collapsed
entity. See Notice of Final Determination of Sales at LTFV:
Bicycles From the PRC, 61 Fed. Reg. 19,026 (Apr. 30, 1996), and
accompanying Issues and Decision Memorandum at cmt. 8; see also
Court No. 14-00043 Page 22
Light-Walled Rectangular Pipe and Tube from Turkey: Final
Determination of Sales at LTFV, 69 Fed. Reg. 53,675 (Sept. 2,
2004); Issues and Decision Memorandum for the Final Determination
in the Antidumping Duty Investigation of Light-Walled Rectangular
Pipe and Tube from Turkey at cmt. 11, A-489-812, (Sept. 2, 2004).
Commerce reviewed all components that constitute the collapsed
entity, that is, Xinya, Guang Ya, and Zhongya. Any responses
should have included data for all three companies. Xinya and Guang
Ya did not respond with their data. Therefore, Commerce correctly
concluded that the collapsed entity failed to demonstrate that it
was eligible for a separate rate and thus it is part of the China-
wide entity.
CONCLUSION
Based on the foregoing, Commerce’s Final Results of
Administrative Review are AFFIRMED. Zhongya’s Motion for Judgment
on the Agency Record is DENIED. Judgment will be entered
accordingly.
/s/ Nicholas Tsoucalas
Nicholas Tsoucalas
Senior Judge
Dated: ___________________
May 27, 2015
New York, New York