Fine Furniture (Shanghai) Ltd. v. United States
2014 U.S. App. LEXIS 7591
| Fed. Cir. | 2014Background
- Commerce initiated a countervailing duty (CVD) investigation of multilayered wood flooring from China and selected Fine Furniture (Shanghai) Ltd. as a mandatory respondent.
- Commerce sought information from the Government of China about how provincial electricity rates were determined (including draft provincial price proposals for 2006 and 2008); Fine Furniture provided all requested data, but the Chinese government did not.
- Commerce found the Chinese government failed to cooperate to the best of its ability and applied adverse inferences to conclude the Electricity Program provided a financial contribution that was specific to respondents.
- Commerce used adverse inferences to select a benchmark electricity price (choosing the highest applicable electricity rates) to calculate the benefit received by respondents and compared that benchmark to respondents’ reported electricity costs.
- Fine Furniture challenged Commerce’s use of adverse inferences in the Court of International Trade, arguing it was improper to apply adverse inferences that effectively penalized a fully cooperating respondent. The trial court upheld Commerce’s determination.
- The Federal Circuit affirmed, holding Commerce lawfully applied adverse inferences to substitute for missing information from the non-cooperating foreign government, even though the resulting rate affected a cooperating respondent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Commerce may apply adverse inferences when a foreign government (an interested party) fails to provide requested info, and the inference affects a cooperating respondent | Fine Furniture: §1677e(b) does not authorize adverse inferences that effectively penalize a cooperating respondent who provided all requested information | Government: §1677e(b) authorizes adverse inferences against any non-cooperating interested party (including a foreign government); using such inferences to fill gaps is lawful even if cooperative respondents are impacted | Court: §1677e(b) unambiguously permits adverse inferences against an interested party (including a foreign government); Commerce lawfully applied adverse inferences to substitute for missing government info, even if cooperative respondents were collaterally affected |
| Whether Commerce improperly applied adverse inferences to data actually provided by respondents (i.e., substituted adverse rates for respondent-submitted electricity costs) | Fine Furniture: Commerce used an adverse benchmark against Fine Furniture despite Fine Furniture reporting actual electricity costs | Government: Commerce used respondents’ reported electricity costs to measure benefits; adverse inferences were applied only to missing government-provided information about rate-setting | Court: Record shows Commerce did not substitute adverse facts for respondent-submitted electricity rates and used reported data to compute benefits; adverse inferences addressed only the missing government information |
| Whether collateral impact on cooperating parties makes adverse inference unlawful under precedent | Fine Furniture: Collateral effect on cooperating respondent renders adverse inference improper (relying on Changzhou Wujin) | Government: Collateral impact is permissible and can incentivize non-cooperating governments to cooperate; precedent allows collateral effects (KYD) | Court: Collateral impact does not render adverse inference improper here; KYD controls and the remedy could encourage government cooperation |
| Whether Commerce’s selection of highest electricity rates as benchmark was arbitrary or unsupported | Fine Furniture: Choosing highest rates to avoid subsidization is punitive and unsupported when respondent cooperated | Government: Highest applicable rates were reasonable to select a benchmark least likely subsidized given missing rate-setting info | Court: Selection was reasonable under the statute and consistent with Commerce practice when a government fails to provide price-setting information |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (interpreting agency deference where statute is ambiguous)
- United States v. Eurodif S.A., 555 U.S. 305 (agency interpretation governs absent unambiguous statutory language to the contrary)
- SNR Roulements v. United States, 402 F.3d 1358 (standard of review for CIT review of Commerce)
- Essar Steel Ltd. v. United States, 721 F. Supp. 2d 1285 (discussing Commerce’s reliance on foreign-government information for subsidy analyses)
- KYD, Inc. v. United States, 607 F.3d 760 (collateral impact on cooperating parties does not make adverse inferences improper)
- Changzhou Wujin Fine Chemical Factory Co. v. United States, 701 F.3d 1367 (limitations on applying adverse rates when cooperating parties alone are affected)
- SKF USA Inc. v. United States, 675 F. Supp. 2d 1264 (discussing when rate selection is plainly adverse to a cooperating party)