Zhaoqing New Zhongya Aluminum Co., Ltd. v. United States
Case Information
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.] May 27, 2015
Dated:________________ 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]
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,
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,
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 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,
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
States,
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 Court No. 14-00043 Page 7 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.
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,
Zhongya misinterprets the Court’s holding in AK Steel
Corp.,
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,
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,
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.,
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 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,
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
requires overlapping boards of directors to support a collapsing
determination.
The regulation’s list of factors is non-
exhaustive. . . .” Catfish Farmers,
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 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.,
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,
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 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,
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,
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 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,
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,
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,
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
Notes
[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.
[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.