Guizhou Tyre Co. v. United States

415 F.Supp.3d 1335

GUIZHOU TYRE CO., LTD. ; Guizhou Tyre Import & Export Co., Ltd., Plaintiffs,andTianjin United Tire & Rubber International Co., Ltd.; Weihai Zhongwei Rubber Co., Ltd.; Consolidated Plaintiffs,

v.UNITED STATES, Defendant.

Slip Op. 19-155

Consolidated Court No. 18-00100

United States Court of International Trade.

Dated: December 10, 2019

Matthew P. McCullough, Tung Nguyen, Curtis, Mallet-Prevost, Colt & Mosle LLP, of Washington, D.C., for plaintiffs Guizhou Tyre Co., Ltd., and Guizhou Tyre Import & Export Co., Ltd.

John Todor, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendant. With him on the brief were Joseph H. Hunt, Assistant Attorney General, Jeanne E. Davidson, Director, and Franklin E. White, Jr., Assistant Director. Of counsel on the brief was Orga Cadet, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington, D.C.

OPINION AND ORDER

Goldberg, Senior Judge:

Now before the court are the Final Results of Redetermination Pursuant to Court Remand, ECF 46-1 (Aug. 27, 2019) ("Remand Results"), of the Department of Commerce ("the Department" or "Commerce") in the countervailing duty ("CVD") investigation of off-the-road tires from the People's Republic of China ("PRC") during the period of review between January 1, 2015 and December 31, 2015. Certain New Pneumatic Off-the-Road Tires from the People's Republic of China , 83 Fed. Reg. 16,055 (Dep't Commerce Apr. 13, 2018) (final results), amended by Certain New Pneumatic Off-the-Road Tires from the People's Republic of China , 83 Fed. Reg. 32,078 (Dep't Commerce July 11, 2018) (am. final results) (" Amended Final Results ") and accompanying Issues & Decision Mem. ("I & D Mem."). Following the court's remand back to Commerce, Guizhou Tyre Co. v. United States , 43 CIT ––––, 389 F. Supp. 3d 1315 (2019) (" Guizhou II "), the Department reviewed its determination on the Export Buyer's Credit Program ("EBCP" or "the Program") and provided additional support for its findings on distortion in the synthetic rubber market in 2015. See generally Remand Results. Specifically, the Department affirmed its findings regarding the EBCP and doubled down on its decision to apply an adverse inference that Plaintiffs used and benefited from the Program. Id. at 3-14. Additionally, the Department further explained its finding that the synthetic market was not distorted in 2015. Id. at 14-16. This additional explanation demonstrated that the composition of the synthetic rubber market in China changed significantly between 2014 and 2015. Id. at 15. Plaintiffs Guizhou Tyre Co. and Guizhou Tyre Import and Export Co., (collectively "Guizhou" or "Plaintiffs") oppose Commerce's Remand Results in its entirety. See Pls.' Comments on the Department of Commerce's Remand Redetermination, ECF No. 48 (Sept. 26, 2019) ("Pls.' Comments").

The Department has provided adequate support for its finding on distortion in the synthetic rubber market. The evidence provided by Commerce indicates that market conditions in 2015 were not "nearly identical" to those in 2014, as Plaintiffs claim. For example, pursuant to Commerce's explanation, the synthetic rubber market underwent a significant increase in import penetration. Therefore, the court sustains Commerce's remand results as to the distortion analysis. However, the court is not satisfied with Commerce's remand results relating to the EBCP. Once again, substantial evidence does not support the requisite threshold finding that there is a gap in the record warranting the use of adverse facts available ("AFA"). The court remands this issue back to Commerce for reconsideration in accordance with this opinion.

DISCUSSION

The court exercises jurisdiction under 28 U.S.C. § 1581(c). The court must hold unlawful any determination, finding, or conclusion found "to be unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i). Further, "[t]he results of a redetermination pursuant to court remand are also reviewed ‘for compliance with the court's remand order.’ " SolarWorld Ams., Inc. v. United States , 41 CIT ––––, ––––, 229 F. Supp. 3d 1362, 1365 (2017) (quoting Xinjiamei Furniture (Zhangzhou) Co. v. United States , 38 CIT ––––, ––––, 968 F.Supp.2d 1255, 1259 (2014) ).

The Department has failed to "compl[y] with the court's remand order," id. , as it relates to Commerce's application of the AFA statute to the EBCP. Therefore, the court remands that portion of the Department's determination back to Commerce for reconsideration consistent with this opinion. As for the Department's market distortion analysis, the court upholds Commerce's redetermination as now supported by substantial evidence on the record, in light of the reasoned explanation now available to the court.

I. Synthetic Rubber Market Distortion Analysis

The Department determined that the 2015 synthetic rubber market was not distorted during the period of review because state-owned producers accounted for 23.97 percent of market consumption for synthetic rubber. Remand Results at 14. Therefore, Commerce used Tier 1 benchmarks for imports to measure the adequacy of remuneration for this input. Plaintiffs challenged this determination, arguing that the results were inconsistent with the Department's distortion findings in 2014 because similar market conditions existed in the two years. The court agreed, noting that the evidence in the record demonstrated that the synthetic rubber market between 2014 and 2015 was distinguished by only a few percentage points. Guizhou II , 43 CIT at ––––, 389 F. Supp. 3d at 1324. And so, the court concluded, the Department would be hard-pressed to justify a change in its distortion analysis, especially where it failed to provide much additional insight into its ultimate determination. Id. See also Hussey Copper. v. United States , 17 C.I.T. 993, 997, 834 F. Supp. 413, 418 (1993) ("It is ‘a general rule that an agency must either conform itself to its prior decisions or explain the reasons for its departure .... This rule is not designed to restrict an agency's consideration of the facts from one case to the next, but rather it is to insure [sic] consistency in an agency's administration of a statute.’ ") (citing Citrosuco Paulista, S.A. v. United States , 12 C.I.T. 1196, 1209, 704 F. Supp. 1075, 1088 (1988) ).

On remand, the court ordered Commerce to "specifically explain how the market for synthetic rubber in the PRC changed between 2014 and 2015 and what aspects of those changes caused Commerce to find that the market was not distorted in 2015." Guizhou II , 43 CIT at ––––, 389 F. Supp. 3d at 1325. The Remand Results show that Commerce did just that. Commerce further explained how the "composition of the synthetic market in China showed significant change between 2014 and 2015," Remand Results at 15. The "significant change" is largely based on the dramatic increase in imports from 2014 to 2015 (a 33.36 percent jump).

Plaintiffs claim that the Remand Results do little to move the needle, because "Commerce is simply leveraging the law of small numbers to reach its ‘significant’ and ‘substantial’ findings, where very small absolute changes in small numbers may yield higher percentage changes, but objectively the changes are still incredibly small." Pls.' Br. 8. However, this contention seems to be based on Plaintiffs' fundamental misunderstanding of Commerce's data points and how percentages work. First, the data provided by the Department indicates that although total domestic consumption and the Government of China's ("GOC") production of synthetic rubber fluctuated only slightly between 2014 and 2015, the (substantial) 33.36 percent increase in import penetration strongly suggests lower overall government involvement. As Commerce explains, a decrease in government production (8.7 percent decrease from 2014 to 2015) and a decrease in the GOC's production as a share of total consumption of the product (a 3.65 percent decrease)—coupled with the 33.36 percent increase in import penetration—supports the conclusion that the Chinese synthetic rubber market was not distorted by government involvement. And, the Department also noted in its Remand Results that there is no evidence on the record that the GOC had administered any policies that would have a "distorting effect on the market by maintaining an artificially high level of domestic supply, leading to artificially lower prices." Remand Results at 16.

Second, Plaintiffs claim that Commerce stills "fails to explain why a higher import penetration number ... and a lower GOC market share ... should necessarily alter its conclusion from 2014 that the market was distorted." Pls.' Br. 8. But unlike in its initial determination, Commerce now does explain how a higher import penetration number affects (at least, the perception of) government involvement. See Remand Results at 27 ("[T]he significantly higher level of imports in 2015 and the correspondingly lower level of the GOC share of consumption indicate a significant loss of government dominance in the market."). Additionally, Guizhou's concern that "Commerce is leveraging the law of small numbers" to manipulate its distortion findings, Pls.' Br. 8, is unsupported by the record. Indeed, the evidence as presented by Commerce's Remand Results demonstrates that the market circumstances did not remain unchanged from 2014. While some of the changes reflected minor percentage shifts, others yielded significant variations from 2014 to 2015—especially on data points that relate to distortion indicators. The fact that Guizhou considers the changes insignificant does not raise concerns with "the law of small numbers," id. The composition of the synthetic rubber market in China showed significant change due to an increase in imports, and this is a sufficient explanation for...