Zhaoqing New Zhongya Aluminum Co. v. United States

Slip Op. 13 - 83
UNITED STATES COURT OF INTERNATIONAL TRADE
ZHAOQING NEW ZHONGYA ALUMINUM
CO., LTD. and ZHONGYA SHAPED
ALUMINUM (HK) HOLDING LTD.,
Plaintiffs,
and
EVERGREEN SOLAR, INC., PUBLIC VERSION
Plaintiff-Intervenor, Before: Donald C. Pogue,
Chief Judge
v. Court No. 11-00181
UNITED STATES,
Defendant,
and
ALUMINUM EXTRUSIONS FAIR TRADE
COMMITTEE,
Defendant-Intervenor.
OPINION
[Commerce’s final determination is AFFIRMED IN PART and REMANDED
IN PART]
Dated: June 27, 2013
Peter J. Koenig, Squire Sanders LLP, of Washington,
DC, for Plaintiffs Zhaoqing New Zhongya Aluminum Co., Ltd, and
Zhongya Shaped Aluminum (HK).
Court No. 11-00181 Page 2
Craig A. Lewis and Theodore C. Weymouth, Hogan Lovells
LLP, of Washington, DC, for the Plaintiff-Intervenor, Evergreen
Solar, Inc.
Tara K. Hogan, Trial Attorney, Commercial Litigation
Branch, Civil Division, U.S. Department of Justice, of
Washington, DC, for Defendant. With her on the briefs were
Stuart F. Delery, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Reginald T. Blades, Jr., Assistant
Director. Of counsel on the briefs was Joanna Theiss, Attorney,
Office of the Chief Counsel for the Import Trade Administration,
U.S. Department of Commerce, of Washington, DC.
Alan H. Price, Derick G. Holt, Laura El-Sabaawi,
Maureen E. Thorson, Robert E. DeFrancesco, III, Wiley Rein LLP,
of Washington, DC and Stephen A. Jones, Gilbert B. Kaplan, and
Daniel L. Schneiderman, King & Spalding LLP, of Washington, DC,
for Defendant-Intervenor, Aluminum Extrusions Fair Trade
Committee.
Pogue, Chief Judge: In this action, Plaintiffs,
producers and importers of extruded aluminum seek review of two
aspects of Commerce’s calculations of countervailing duties on
certain aluminum extrusions from the People’s Republic of China
(“PRC” or “China”). See Aluminum Extrusions from the People’s
Republic of China, 76 Fed. Reg. 18,521 (Dep’t Commerce Apr. 4,
2011) (final affirmative CVD determination) (“Final
Determination”) and accompanying Issues and Decision Memorandum
(“I&D Memo”). Plaintiffs first challenge Commerce’s inclusion
of import duties in its calculation of a world market price for
use as the benchmark for determining the benefit received from
government-supplied primary aluminum. Plaintiffs also challenge
Commerce’s finding that a plot of land acquired by New Zhongya
Court No. 11-00181 Page 3
(hereinafter “Zhongya”) was, at the time of acquisition,
comparable to a fully developed Thai industrial park. For the
reasons stated below, the court finds that Commerce’s inclusion
of import duties was in accordance with law, but that Commerce’s
finding that the land leased by Zhongya in 2006 was, at the time
the land use rights were acquired, comparable to a fully
developed industrial park was not supported by a reasonable
reading of the evidence of record. Therefore, Commerce’s Final
Determination is affirmed in part and remanded in part.
The court has jurisdiction pursuant to 28 U.S.C.
§ 1581(c).
BACKGROUND
In its 2010 investigation of certain extruded aluminum
products from the PRC, Commerce determined that countervailing
duties (“CVD”s) were appropriate to offset subsidies provided to
Chinese producers of extruded aluminum. See Aluminum Extrusions
from the People’s Republic of China, 76 Fed. Reg. 30,653 (Dep’t
Commerce May 26, 2011) (CVD order). Specifically, during the
investigation, Commerce found that the respondents received
financial contributions in the form of primary aluminum inputs
supplied by companies that were government authorities. I&D
Memo cmt. 21 at 96. In deciding whether these financial
contributions conferred a benefit, Commerce selected an
Court No. 11-00181 Page 4
appropriate benchmark against which to measure the adequacy of
the price paid for government-supplied primary aluminum. Id.When selecting the appropriate benchmark, Commerce found that
actual transaction prices within the PRC were “significantly
distorted” due to a high percentage of state owned enterprises
in the market, and chose to use the world market price as the
appropriate benchmark. Id. In calculating the world market
prices, and in accordance with its regulations, Commerce
included applicable delivery charges and import duties. 19
C.F.R. § 351.511(2)(iv). Plaintiffs challenge this calculation,
arguing that the inclusion of import duties was improper because
Plaintiffs paid no duties on their imports of primary aluminum
from Hong Kong.
Commerce also investigated allegations that China
provided land-use rights for less than adequate renumeration to
aluminum extrusion producers and concluded that provision of
such land-use rights constituted a countervailable subsidy. I&D
Memo cmt. 24. As with the supplies of primary aluminum,
Commerce sought to find an appropriate benchmark to determine
whether the respondents received any benefit. Commerce selected
the purchase price of a fully developed industrial park in
Bangkok, Thailand, as the benchmark and found that when compared
to a land-use lease signed by Zhongya in 2006, Zhongya received
a benefit. Id. at cmt. 24. Plaintiffs also seek judicial
Court No. 11-00181 Page 5
review of this determination, arguing that the record as a whole
shows that the price Zhongya paid in 2006 was for land that
contained no infrastructure and required significant
improvements before manufacturing could occur, and therefore the
purchase price of a fully developed industrial park is not a
comparable benchmark. Id.STANDARD OF REVIEW
The court will sustain Commerce’s “determination[s],
finding[s], or conclusion[s]” unless 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). To be in
accordance with law, the agency’s decision must be authorized by
the statute, and consistent with the agency’s regulations. See,
e.g., Hontex Enter., Inc. v. United States, 27 CIT 272, 293, 248
F. Supp. 2d 1323, 1340 (2003). When reviewing agency
determinations, findings, or conclusions for substantial
evidence, the court assesses whether the agency action is
reasonable given the record as a whole. Nippon Steel Corp. v.
United States, 458 F.3d 1345, 1350-51 (Fed. Cir. 2006).
DISCUSSION
I. Import Duties
Court No. 11-00181 Page 6
Plaintiffs first challenge Commerce’s inclusion of
import duties in its benchmark calculation when it investigated
Chinese producers imports of primary aluminum. Specifically,
Plaintiffs assert that because they paid no import duties on
imports of primary aluminum from Hong Kong, Commerce’s inclusion
of import duties improperly inflates the benchmark value used to
determine the value of this benefit.2 Plaintiffs claim that
when, as here, Commerce uses world market prices, it errs in
including import duties in its calculations.
19 C.F.R. § 351.511(a)(2) describes Commerce’s
methodology for calculating benefits received. Generally,
Commerce compares the government price to the actual market
price for the good or service received. 19 C.F.R.
§ 351.511(a)(2)(i). This is commonly referred to as a “tier-one
benchmark.” See also I&D Memo cmt. 21 at 96 (noting that a
tier-one benchmark is preferred to a tier-two benchmark).
However, should Commerce determine, as it did here, that “there
is no usable market-determined price” to use as the benchmark,
then it proceeds to the second tier benchmark, the world market
2
Plaintiffs also claim that Commerce’s inclusion of
[[
]] was improper [[
]] and therefore not supported by substantial
evidence. However, Commerce notes correctly that Plaintiffs
failed to raise this issue at the administrative level and thus
have not exhausted their administrative remedies on this issue.
See Dorbest, Ltd. v. United States, 604 F.3d 1363, 1375 (Fed.
Cir. 2010).
Court No. 11-00181 Page 7
price. See 19 C.F.R. § 351.511(a)(2)(ii); I&D Memo cmt. 20 at 94
(deciding that distortion in the PRC market makes tier-one
pricing unusable as a benchmark). The regulation is specific in
stating that when using the world market price, Commerce is to
include delivery charges and import duties in its calculations.
19 C.F.R. § 351.511(a)(2)(iv) (“[Commerce] will adjust the
comparison price to reflect the price that a firm actually paid
or would pay if it imported the product. This adjustment will
include delivery charges and import duties.”)
Here, Commerce found that the “market for primary
aluminum is significantly distorted by the presence of companies
determined to be government authorities” and that the preferred
tier-one benchmark was therefore unusable. I&D Memo cmt. 21 at
94, 96. Pursuant to its regulation, Commerce then proceeded to
use tier-two pricing, the world market price, as a benchmark
price and adjusted it to include delivery charges and import
duties. I&D Memo cmt. 20 at 94; 19 C.F.R. § 351.511(a)(2)(iv).
Plaintiffs challenge the inclusion of import duties,
claiming that the regulation calls for adjusting the tier-two
benchmark to reflect what a firm actually paid or would pay, and
that because they paid no import duties, the tier-two benchmark
impermissibly includes such duties. But Plaintiffs’
understanding of the regulations is flawed. As the government
notes, both in its I&D Memo and before the court, Plaintiffs are
Court No. 11-00181 Page 8
asking for a “company-specific, tier-one benchmark” but have
failed to challenge Commerce’s finding that tier-one pricing is
unavailable. Def.’s Opp’n to Pls.’ Mot. For J. on the Agency
R., ECF No. 53 at 11-12 (“Gov’t Br.”). Therefore, Commerce’s
decision that tier-one pricing is unusable, and the consequent
use of the tier-two pricing, the world market price, as a
reasonable benchmark is well grounded in the applicable
regulations. Accordingly, because the world market price by
regulation must include import duties, Commerce’s decision to
include such import duties in its calculation of the benchmark
is reasonable and in accordance with law.3 See Hontex, 27 CIT at
292–93, 248 F. Supp. 2d at 1340–41.
II. Land Use Benchmark
Plaintiffs next claim that Commerce’s selection of a
fully developed industrial park purchase price in Bangkok,
Thailand as the land purchase price benchmark is not comparable
to Zhongya’s 50 year lease of wholly undeveloped land.
Plaintiffs refer to numerous citations to the record
which show that, from the beginning of the investigation, it has
3
Plaintiffs also challenge the applicable regulation as
impermissibly violating the statute, 19 U.S.C. § 1677(5)(E).
However, not only is this argument barely set forth in
Plaintiffs’ brief, Plaintiffs failed to raise the issue at the
administrative level, and it is therefore not appropriate for
the court to consider it. See Dorbest, 604 F.3d at 1375.
Court No. 11-00181 Page 9
maintained that the land leased by Zhongya was completely
undeveloped and required significant development, such as
infrastructure for water and electricity, before it could be
used as a production facility. See Pls.’ Mot. For J. on the
Agency R., ECF No. 44 at 5 n.11 (“Pls.’ Br.”)(listing extensive
record citations to documents showing that Zhongya developed the
land). Indeed, the lease for Zhongya’s land contains an article
providing timelines for Zhongya to begin construction and
provides for repossession should Zhongya fail to do so in a
timely manner. Zhongya Supplemental Questionnaire Resp. (Aug.
6, 2010), Admin. R. Con. Doc. 21 [Pub. Doc. 120] at 297, Exhibit
15. Furthermore, the lease states that Zhongya is “solely
responsible for the construction and improvement of the
supporting facility of sewage and drainage” on the land.4 Id.Commerce fails to squarely address Plaintiffs’
argument that the land it leased was completely undeveloped in
2006 and required significant improvement. In the I&D Memo,
Commerce cites a promotional website provided by Petitioners on
July 13, 2010, and claims that the data on the website dates
4
Plaintiffs have also submitted a copy of a construction
contract which they assert is for the construction of
infrastructure such as electricity, water, and gas. Pls.’ Br.
at 5 n.11 (citing Zhongya Third Supplemental Questionnaire Resp.
(Oct. 13, 2010), Admin. R. Con. 48 [Pub. Doc. 233], Exhibit 5).
Commerce has failed to address the construction contract or the
terms of the land lease in both its court briefings and the I&D
Memo.
Court No. 11-00181 Page 10
back to 2004. I&D Memo cmt. 24 at 106. The website exists to
promote the region in which Zhongya leased its land. In its
brief to the court, Commerce notes that the excerpted pages have
a note stating, “Copyright 2004 ZhaoQing Government,” and the
website currently describes the region as an “industrial estate
which has been well-equipped with electricity, water, cable,
road {sic}. . . .” Gov’t Br. at 18 (citing Petitioner’s First
New Subsidy Allegations (Jul. 13, 2010), Pub. Doc. 91, Exhibit 1
at 12). This argument completely misses the point. First,
promotional websites which exist to advertise and attract
business are not held to any standards of accuracy and fact and
do not carry the same weight as, for example, findings that
arise from a thorough administrative investigation.5 See
Constantine Polites v. United States, __ CIT __, 780 F. Supp. 2d
1351, 1356 n.11 (2011). Because websites are fluid in nature
and may be edited at any point in time with no discernable
trace, a note that the pages are copyrighted 2004 does not
guarantee that the information was placed there in 2004. While
it is, of course, for Commerce to decide the weight of this
evidence, F. Lli De Cecco Di Filippo Fara S. Martino S.p.A. v.
5
The court notes that it is possible to find websites
advertising products that range from mundane health products to
“petite lap giraffes,” and that it is often difficult to discern
what is fact and what is “mere puffery” on these promotional
websites. See Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection
Serv., Inc., 911 F.2d 242, 246 (9th Cir. 1990).
Court No. 11-00181 Page 11
United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000), Commerce’s
weighing must not be unreasonable. Universal Camera Corp. v.
NLRB, 340 U.S. 474, 477 (1951). Second, the amenities currently
advertised as available in the general region have absolutely no
bearing on the condition of the specific plot as it existed when
Zhongya assumed the land use rights in 2006.
Defendant-Intervenor argues that the publication date
of the website is irrelevant because the website states that by
“August 2005, more than 170 enterprises have found their homes
in the industrial park among which 60 have gone into operation.”
Resp. In Opp. to Pls.’ Mot. For J. on the Agency R., ECF No. 52
at 17. Again, this argument misses the point. Nothing in a
promotional website for the general region supports a finding
that the specific plot leased by Zhongya in 2006 was comparable
to a fully developed industrial park in Bangkok, Thailand.
Indeed, the language cited by Defendant-Intervenor, stating that
60 of 170 enterprises in that region were operational in 2005,
tends to suggest that the region in 2005 was not a fully
equipped industrial park allowing tenants to immediately begin
manufacturing.
Commerce’s sole argument concerning the specific plot
leased by Zhongya also fails. Commerce states that it
“collected” photographs during verification which show power
lines and a canal on or near the site. Gov’t Br. at 17
Court No. 11-00181 Page 12
(“Concerning the parcel for which New Zhongya purchased land-use
rights, Commerce noted that, during verification, it collected
pictures showing power lines and a canal on or near the site.”);
I&D Memo at 107. Commerce does not clearly indicate the
provenance of these photographs, but Plaintiffs state that they
were selectively chosen from a slideshow they created to show
the improvements they made to the land from 2005 to 2010. Pls.’
Br. at 7. Plaintiffs assert that the photographs Commerce used
were taken after Zhongya had completed its improvements to the
land and therefore these photographs do not show the condition
of the plot as it existed when Zhongya assumed the lease in
2006. Id. Given the record as a whole, the court is not
persuaded that these photographs provide substantial evidence
that the land Zhongya leased was a fully developed industrial
park in 2006, or that the photographs even depict the land as it
existed in 2006.
In sum, the court cannot conclude that a reasonable
reading of the record as a whole supports Commerce’s rebuttal of
Plaintiffs’ claim that the land they leased was undeveloped in
2006 and therefore not comparable to a fully developed
industrial park. Commerce relies on a 2010 screenshot of a
promotional website for the region to support its claim that the
plot as it existed in 2006 was a fully developed industrial park
and has not placed any evidence on the record rebutting or
Court No. 11-00181 Page 13
addressing Plaintiffs’ claims that photographs showing a canal
and power lines on or near the property were taken in 2010 and
not 2006. The court therefore holds that Commerce’s finding
that the land as it existed in 2006 was comparable to a fully
developed industrial park is not supported by substantial
evidence and remands for reconsideration or further explanation.6
See Nippon Steel, 458 F.3d at 1350-51.
CONCLUSION
For the reasons stated above, Commerce’s Final
Determination is affirmed in part and remanded in part for
reconsideration of its selection of a fully developed industrial
park as a benchmark for the land-use rights acquired by
Plaintiffs in 2006. Commerce shall file its remand
determination with the court by August 5, 2013. The parties
will have until August 19, 2013 to file comments, and Commerce
has until September 2, 2013 to file a response.
It is so ORDERED.
_____/s/ Donald C. Pogue____
Donald C. Pogue, Chief Judge
Dated: June 27, 2013
New York, NY
6
Plaintiffs challenge the Thai benchmark data on other
grounds, but because the court is remanding to Commerce for
reconsideration, it does not reach these arguments.
ERRATA
Zhaoqing New Zhongya Aluminum Co., Ltd. and Zhongya Shaped
Aluminum (HK) Holding Ltd., v. United States, Court No. 11-
00181, Slip Op. 13-83, dated June 27, 2013.
Page 3: Following the sentence ending on Line 11, place footnote
marker 1. Footnote 1 should read: “This action challenging a
final affirmative countervailing duty determination was brought
pursuant to 19 U.S.C. § 1516a(a)(2)(B)(i).”
July 19, 2013