Both-Well (Taizhou) Steel Fittings, Co. v. United States

557 F.Supp.3d 1327

BOTH-WELL (TAIZHOU) STEEL FITTINGS, CO., LTD., Plaintiff,

v. UNITED STATES, Defendant,andBonney Forge Corporation, Defendant-Intervenor.

Slip Op. 22-10

Court No. 21-00166

United States Court of International Trade.

February 8, 2022

Peter Koenig and Jeremy W. Dutra, Squire Patton Boggs (US) LLP, of Washington, D.C. for plaintiff Both-Well (Taizhou) Steel Fittings, Co., Ltd.

Claudia Burke, Assistant Director, and Kara M. Westercamp, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C. for defendant. Also on the brief were Brian M. Boynton, Acting Assistant Attorney General, and Jeanne E. Davidson, Director. Of counsel on the brief was Jared M. Cynamon, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington D.C. Roger B. Schagrin, Christopher T. Cloutier, Benjamin J. Bay, and Michelle R. Avrutin, Schagrin Associates, of Washington, D.C. for defendant-intervenor Bonney Forge Corporation.

OPINION AND ORDER

Kelly, Judge:

Before the court is Both-Well (Taizhou) Steel Fittings, Co., Ltd.’s ("Both-Well") rule 56.2 motion for judgment on the agency record challenging the U.S. Department of Commerce's ("Commerce") final determination in the 2018 administrative review of the countervailing duty ("CVD") order on forged steel fittings ("FSF") from the People's Republic of China ("China"). See Pl.’s Mot. for J. on Agency R., Aug. 30, 2021, ECF No. 25 ("Pl.’s Mot."); [FSF] from [China], 86 Fed. Reg. 14,722 (Dep't Commerce Mar. 18, 2021) (final results of [CVD] Admin. Review; 2018) ("Final Results") and accompanying Issues and Decision Memo., C-570-068, (Mar. 10, 2021), ECF No. 19-5 ("Final Decision Memo."); [FSF] from [China], 83 Fed. Reg. 60,396 (Dep't Commerce Nov. 26, 2018) ([CVD] Order) ("FSF CVD Order"). Both-Well challenges Commerce's decision to use facts available with an adverse inference to assign a CVD rate of 10.54% for its use of China's Export Buyer's Credit Program ("EBCP") despite unrebutted evidence of non-use from Both-Well and its U.S. customers (the "non-use certifications," "Customer Declaration," or "declarations"). Memo. of Points and Authorities in Supp. of [Pl.’s Mot.] 4–8, Aug. 30, 2021, ECF No. 25 ("Pl.’s Br."). Defendant counters that Commerce lawfully and reasonably resorts to facts available with an adverse inference because the Government of China (the "GOC") failed to cooperate to the best of its ability by failing to provide Commerce with information about the administration of the EBCP necessary to verify the non-use certifications, creating a gap in the record. Def.’s Resp. to [Pl.’s Mot.] at 11–21, Nov. 2, 2021, ECF No. 30 ("Def.’s Br."). Commerce filled the gap using facts available with an adverse inference and determined that Both-Well benefitted from the EBCP. Id. at 18. For the following reasons, the court remands Commerce's Final Results.

BACKGROUND

Commerce issued a CVD order covering FSF from China in 2018. FSF CVD Order. On January 17, 2020, Commerce initiated an administrative review of the FSF CVD Order, at the request of Both-Well and domestic producer Bonney Forge Corporation ("Bonney Forge") for the period of March 14, 2018 through December 31, 2018. Letter from Roger B. Schagrin and Christopher T. Cloutier, Schagrin Associates to Sec. of Commerce Re: [FSF] from China: Request for Admin. Review, PD 2, Doc No. 3916313- 01 (Nov. 27, 2019); Letter from Peter Koenig, Squire Patton Boggs (US) LLP to Sec. of Commerce Re: [FSF] from China: Antidumping, PD 3, Doc. No. 3916587- 01 (Nov. 27, 2019); Initiation of Antidumping and [CVD] Admin. Reviews, 85 Fed. Reg. 3,014, 3,022 (Dep't Commerce Jan. 17, 2020).¹ On March 12, 2020, petitioners Bonney Forge and the United Steel, Paper, Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union alleged that Both-Well may have received preferential lending through the EBCP. Letter from Roger B. Schagrin and Christopher T. Cloutier, Schagrin Associates to Sec. of Commerce Re: [FSF] from China: New Subsidy Allegation, PD 36, Doc No. 3953930-01 (Mar. 13, 2020) ("New Subsidy Allegation"); Decision Memo. for the Preliminary Results: Admin. Review of the [CVD] Order on [FSF] from [China] C-570-068 3, PD 85, Doc. No. 4050966-01 (Dep't Commerce Nov. 20, 2020) ("Prelim. Decision Memo."). The EBCP is a program backed by the GOC providing medium-and long-term loans to importers at preferential, low interest rates to finance eligible projects. See Final Decision Memo. at 11, 19, 23 n.99.

On April 7, 2020, Commerce initiated an investigation into the New Subsidy Allegation and issued questionnaires to Both-Well and the GOC seeking additional information about the use and administration of the EBCP. Memo. from Janae Martin and Kate Johnson, International Trade Compliance Analysts, Antidumping and Countervailing Duty Operations to Irene Darzenta Tzafolias, Director Office VIII, Re: Decision Memo. for New Subsidy Allegation, PD 42, Doc No. 3962212-01 (Apr. 7, 2020); Letter from Rebecca Trainor, Program Manager, AD/CVD Operations, Office VIII, Dep't Commerce to Mr. Gu Yu, First Secretary, Embassy of [China], Economic and Commercial Office Re: Admin. Review of the [CVD] Order on [FSF] from [China]: New Subsidy Allegations Questionnaire, PD 45, Doc No. 3962767-01 (Apr. 8, 2020) ("GOC Questionnaire"); Letter from [Commerce] to Peter Koenig, Squire Patton Boggs (US) LLP Re: 2018 Admin. Review of the [CVD] Order on [FSF] from [China]: New Subsidy Allegations Questionnaire for Both-Well, PD 46, Doc. No. 3962772-01 (Apr. 8, 2020); Prelim. Decision Memo. at 3.

Both-Well and the GOC timely responded to Commerce's questionnaires. Resp. from [China] Ministry of Commerce, Trade Remedy and Investigation Bureau to [Commerce] Re: GOC New Subsidy Allegation Questionnaire Response: First Admin. Review of the [CVD] Investigation on [FSF] from [China] (C-570-068), PD 54, CD, 14 Doc. No. 3966875-01 (Apr. 21, 2020) ("GOC NSA Resp."); Resp. from Squire Patton Boggs (US) LLP to [Commerce] Re: [FSF] from China, PD 60, CD 16, Doc. No. 3969927-01 (Apr. 22, 2020) ("Both-Well NSA Resp."). Both-Well certified that it did not benefit from the EBCP and "it did not assist any of its customers in obtaining buyer's credits, and never had contact nor was associated with China's Ex-Im Bank during the period of review." Pl.’s Br. at 2; see also Both-Well NSA Resp. at 2–3. Both-Well included a list of its customers and non-use certifications from all its U.S. customers certifying that they did not finance any purchases from Both-Well using the EBCP in its response. Both-Well NSA Resp. at Exs. NSA-1, NSA-2; see also Pl.’s Br. at 2.

In both its initial questionnaire and a subsequent supplemental questionnaire, Commerce requested that the GOC provide the information in Commerce's Standard Questions Appendix,² the 2013 revisions to the Administrative Regulations (the "2013 Administrative Regulations") for the EBCP, and a list of partner or correspondent banks³ involved with the disbursement of EBCP funds. Final Decision Memo. at 16–18; see also GOC Questionnaire; Letter from [Commerce] to Embassy of [China] re: Admin. Review of the [CVD] Order of [FSF] from [China]: GOC Supplemental Questionnaire, PD 74, Doc No. 4002506-01 (July 16, 2020) ("GOC Supplemental Questionnaire"). The GOC did not provide all the documents requested by Commerce and instead confirmed that none of Both-Well's U.S. customers "applied for, used, or benefitted from the alleged program during the P[eriod] O[f] I[vestigation]"⁴ therefore, "a response to the Standard Questions Appendix is not necessary." GOC NSA Resp. at 1. Furthermore, the GOC stated that in light of the non-use, Commerce's request for a list of intermediary banks was "overly broad ... and ... unnecessary."⁵ Id. at 3. The GOC failed to provide the 2013 Administrative Regulations because it claimed they are "internal to the [China Export-Import] [B]ank, non-public, and not available for release." GOC NSA Resp., Ex. 1 at 3; see also Letter re: [GOC Supplemental Questionnaire] 2, PD 78, Doc No. 4004744-01 (July 22, 2020) ("GOC NSA Supp. Resp.").

In the Final Decision Memo. Commerce determined that it was unable to verify the non-use certifications provided by Both-Well and its U.S. customers because the GOC failed to provide necessary information pertaining to the administration of the EBCP. Final Decision Memo. at 15–20. Specifically, Commerce explained that it could not verify the non-use certifications without the names of the intermediary banks that might appear in the books and records of the recipient because record evidence indicates that the EBCP uses a "complicated structure of loan disbursements." Id. at 18–19. Commerce also determined that verification of the non-use certifications is further complicated by revisions to the EBCP made in 2013, which may have eliminated the $2 million minimum disbursement requirement, increasing the number of potential loans for Commerce to review. Id. at 17–18. Consequently, Commerce determined that it lacked information necessary to verify the non-use certifications due to the GOC's failure to cooperate, creating a gap in the record that Commerce filled using facts available with an adverse inference. Id. at 23, 25–26. Commerce assigned Both-Well a countervailable subsidy rate of 10.54%. Id. at 27. Both-Well now challenges Commerce's decision to disregard the non-use certifications on the record and use facts available with an adverse inference. Pl.’s Br. at 1.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to § 516A(a)(2)(B)(iii) of the Tariff Act of 1930 as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2018),⁶ and 28 U.S.C. § 1581(c) (2018), which grant the court authority to review actions contesting the final determination in an administrative review of a CVD order. The court will uphold Commerce's determination unless it is ...